PE Tech Report

NEWSLETTER

Like this article?

Sign up to our free newsletter

Too many private equity firms chasing too few deals, says Eversheds

The vast expansion of the private equity industry over the past few years ‘was always going to end in tears’, according to Mark Spinner, head of private equity at law firm Eversheds, who e

The vast expansion of the private equity industry over the past few years ‘was always going to end in tears’, according to Mark Spinner, head of private equity at law firm Eversheds, who expects to see industry consolidation through secondary buyouts of portfolios.

Commenting on a survey by Private Equity News in which 80 per cent of private equity executives said they expected consolidation in the industry over the next year, Spinner says: ‘I think that it is common ground amongst many who operate in the private equity space that the proliferation of new funds that have emerged, and the incursion into the private equity space by the hedge funds over the past three or four years, was always going to end in tears.

‘There are too many private equity investors chasing too few deals, and as such only the strong will survive. Limited partners will run to quality managers and will put those general partners with less impressive track records under pressure as they fail to be able to secure properly-priced deals in an already barren marketplace for new investment opportunities.

However, Spinner does not expect to see consolidation taking place through acquisitions or mergers in the conventional sense. ‘It is more likely to come from an inability of the general partners that have not delivered the expected levels of return to raise new funds, leading to a gradual polarisation within the industry with secondary buyouts of private equity portfolios becoming more common,’ he says.

‘Consolidation will not lead to more deals but it should lead to greater certainty as competition reduces and only the best, and most reliable, investors compete for the deals that are around.’

Like this article? Sign up to our free newsletter

MOST POPULAR

FURTHER READING

Featured

Blackstone Private Equity