Survey: Half of firms will fail, but not mine

GPs believe roughly half of all private equity firms in market will collapse, according to a recent survey, which also revealed GP’s concerns over the financial performance of portfolio companies.

The number of private equity houses in operation will be sliced in half over the next two years, according to a recent survey conducted by Smith & Williamson, a financial services firm.

The firm surveyed approximately 100 senior executives at 67 small to mid-market private equity firms.

Respondents, however, remained optimistic concerning their own fate, with nearly three-quarters of respondents expressing confidence about their own future.

“The market still appears fragile with mixed experiences and no clear consensus on direction in a number of areas,” said Brian Livingston, head of private equity at Smith & Williamson, in a statement.

Two-thirds of respondents also expect a greater number of portfolio companies will breach banking covenants in the year ahead, “even though the availability of debt finance has improved somewhat from the dire position of last year”, the statement said.