Data Room: 2016 outlook survey

Slowing global growth, falling oil prices and high purchase price multiples are casting a shadow over 2016, judging by a survey of Europe and North America private equity investors.

BDO Outlook chart Regional Split 411

Some 40 percent of North American respondents saw the international environment as unfavourable for private equity funds looking to invest, according to accounting firm BDO USA’s seventh annual PErspective Private Equity study. Their European counterparts were more optimistic – just 10 percent believed the conditions weren’t in their favour.

The biggest concern in deal-making was the misalignment between buyers and sellers regarding pricing expectations.

Almost two-thirds (64 percent) ranked it as their top challenge, up from 48 percent last year.

Of those surveyed, 95 percent expected to close five or fewer new platform deals in 2016, and 93 percent expected to invest $250 million or less, both slightly up from last year.

BDO Outlook chart Forward Planning 411

Regarding sectors, respondents picked manufacturing as the best opportunity, partly due to the low cost of energy in the US, with technology and healthcare the top choices for an increase in valuations.

However, retail and distribution was tipped as the sector expected to see a fall.

BDO Outlook chart Sector Fatigue 411