PE Funds May Find It Is Time To Sell - Themselves
The world of private equity is becoming like the Hotel California: You can check out any time you like, but you can never leave. We already know that the Great Recession has put private equity to the test. The fundraising boom of 2006 and 2007 backfired as firms were left holding armories full of "dry powder" - $450 billion left to spend, at last count - but couldn't for the life of them find a way to cash in their investments. IPOs have been choppy. Auctions are expensive. There is a whole world of banks that are difficult to buy. Now the news comes, via Bloomberg, that a House bill would make it more expensive for PE, VC and hedge fund managers to sell stakes in their firms to raise money or take on new partners. Funds would have pay ordinary income on the sales, Bloomberg points out, while regular businesses wouldn't.
