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Study: Private equity ‘stagnant’ on transactions, fundraising

A majority of private equity executives surveyed expect acquisitions and exits to remain the same or fall during the second half of 2011, according to a recent study from EisnerAmper.

Private equity fund managers have lowered their expectations on deal flow and fundraising in the second half of 2011, according to a recent study from advisory and accounting firm EisnerAmper.

“Private equity firms’ projected activity for new acquisitions and their outlook for fundraising is stagnant,” the report said. “Sales or dispositions are projected to be lower for the second half of 2011.”

A majority of the 111 US private equity executives who participated in the survey indicated they expected acquisition and exit levels to remain the same or fall in the second half of the year. Only 35 percent of those surveyed anticipated an increase in the availability of debt financing for deals through the remainder of 2011, compared to more than 80 percent that thought so roughly six months ago, according to the report. 

Respondents tempered their expectations from earlier in the year, when a majority anticipated increased activity in closing acquisitions, competitive bidding and availability of debt financing through 2011.

“I think the third quarter has definitely caused some people to take a pause,” EisnerAmper partner Christopher Loiacono said, adding that the declining availability of debt financing is likely fueling the lowered expectations for deal flow and exit levels.

The study also picked up on what appears to be a growing trend of firms developing an operational approach to investing, with a ‘significant’ 37 percent of respondents indicating that they would be increasing the size of their staff in operations, research/analysis and compliance fields. Only 3 percent of those surveyed said they expected to reduce their staff size. 

A majority of survey respondents were general partners as well as managing, executive and other directors. Other respondents included a cross-section of principals, chief financial officers, chief operating officers and vice presidents, among other senior positions, according to the report. A large majority of the firms represented in the survey would be classified as small to mid-market, with 76 percent controlling less than $500 million of assets under management.