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Private equity outlook 2009 – Bill Crossan, Close Growth Capital: “Regional M&A teams fighting for survival”

Bill Crossan, managing director of Close Growth Capital, says the first and second quarters of next year should see a reassessment of price expectations from vendors, creating opportunitie

Bill Crossan, managing director of Close Growth Capital, says the first and second quarters of next year should see a reassessment of price expectations from vendors, creating opportunities for private equity firms with funds to invest.

PE Wire: What is the outlook for the private equity industry in 2009?

BC: Inevitably there will be issues to resolve in some portfolio companies as the downturn bites into the real economy putting stress on leveraged businesses. Private equity firms will need to recalibrate their expectations for financial reward and time horizons. However, for those with funds to invest there will be opportunities once prices become more realistic as well as a number of distressed vendors, both private equity and trade.

In a low-volume deal environment advisors will be working extra hard to get things away as the regional teams are going to be fighting for their survival. A more integrated, single-source approach is likely to attract deals, as certainty of delivery without a requirement for external bank funding is a powerful proposition. The first and second quarters of 2009 should see a reassessment of price expectations from vendors.

PE Wire: What will the fundraising environment be like?

BC: The fund raising environment will be tough. Investors are not immune from the crunch and many have their own liquidity problems. Those general partners with a clearly articulated and differentiated strategy offering a more risk-adjusted return with better downside protection are likely to prosper. There will be some competition from investors looking to capitalise on the secondary market as assets come up in distressed portfolios.

PE Wire: What will the exit environment be like?

BC: If you have a high-quality asset it is unlikely that multiples will have come back that much during 2009 so you are probably better off hanging on until early 2010 unless you are a forced seller.

PE Wire: Who will be the winners and losers?

BC: The winners will be those with capital to invest and a differentiated product offering. Certainty of deliverability and flexibility of structure and thinking will be key attributes.

PE Wire: How is your firm placed?

BC: Given our integrated approach Close Growth Capital is well placed to continue to win deals and attract funds from investors. We have built a strong team, have cash to invest and are hungry to grow our business in these advantageous market conditions.

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