PE Firm Mergers Are a Bad Idea. Here's Why:
Could the acquirers become the acquirees? I've heard rumblings of private equity consolidation for a few weeks now, stemming from research done by law firm Simmons & Simmons. The study found that 79% of 700 surveyed PE pros expect increased consolidation in 2009. I dismissed this as unlikely, but the topic continues to surface in conversations. There even are some trader rumors that Blackstone and KKR could acquire 3i. Would struggling buyout firms really merge with each other? At the very least, the image of PE pros nervously biting their nails in fear of a hostile takeover is ironic, since they're usually the ones inflicting such fear on public company employees. Either way, there are several issues with this idea, which I've laid out in a nice little list.
