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Private equity outlook 2009 – Neil MacDougall, Silverfleet Capital: “Rise in unconventional equity-only deals”

Neil MacDougall, managing partner of Silverfleet Capital, says the firm is well placed to thrive in 2009, with only one deal done in 2007 and a new fund to invest without any pre-credit cr

Neil MacDougall, managing partner of Silverfleet Capital, says the firm is well placed to thrive in 2009, with only one deal done in 2007 and a new fund to invest without any pre-credit crunch baggage.

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

NMD: We will see few successful exits and very little carry paid. The restructuring advisers will be rubbing their hands with glee as a number of private equity houses will need to restructure their portfolio companies just to get investors some of their money back.

There will be a steady trickle of conventional smaller leveraged buyout deals. We will also see a number of private investment in public equity transactions with investors taking minority stakes in listed vehicles, and unconventional equity-only transactions.

PE Wire: What will the fundraising environment be like?

NMD: For those poor souls who start to fundraise in 2009, conditions are likely to be dire.

PE Wire: What will the exit environment be like?

NMD: With banks unable to offer debt packages at terms that would encourage interested parties to make strong bids, the exit market is going to be terrible in 2009.

PE Wire: Who will be the winners and losers?

NMD: The winners will be those who manage to get the finance to buy businesses at bargain prices, also the restructuring advisers and the asset-based lenders. The losers will be the sellers who have to sell: traditional M&A advisers, cash flow-based lenders who don’t have the foresight to adapt their offering, and investors who exit the private equity asset class.

PE Wire: How is your firm placed?

NMD: Silverfleet is well placed in this market with a small historic portfolio and only one deal done in 2007. We also have a new fund to invest without any pre-credit crunch baggage.

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