Private Equity Funds Face Uncertainties and Opportunities
New York, N.Y. – — With an estimated $51 billion to invest before the end of 2011, US-focused private equity funds are faced with uncertainties and opportunities springing from post Dodd-Frank regulatory requirements, the impact of potential tax increases, and the possible end of certain Bush-era tax cuts, as well as newly mandated compliance burdens.
Even with this uncertainty, there are signs of an improved investment landscape in both the IPO and M&A areas. Private equity firms holding significant amounts of “dry powder” need to deploy capital quickly and efficiently and become active buyers of companies. The expectation is an increase in the dollar volume of buyout activity, with closely held companies drawing significant interest from private equity funds.
According to The Pulse of Private Equity, EisnerAmper’s survey of more than 120 senior private equity managers, the increase in deal flow and availability of debt financing is expected to continue through the end of this year. Other trends noted in the survey included a moderate increase in employment at fund companies due to increased activity and compliance requirements; and higher levels of due diligence activity demanded by potential investors.
“These signs of increased activity highlight the dynamics we are seeing in private equity today”, said Peter Cogan, partner and co-lead of EisnerAmper’s Financial Services practice. “Fund manager strategies must take into account a number of forces including cash flow, profitability, efficiency, leverage, transparency, competition and compliance.”
“The opportunities to invest in quality companies are out there,” says Alan Wink, a director at EisnerAmper. “They come from many sources such as closely held and family-owned companies, high net worth individuals and entrepreneurs, sovereign wealth funds and other institutions. As these investments come online, they work to create new jobs and stimulate growth in the economy.”
EisnerAmper LLP was recently formed through a combination of two leading regional accounting firms, Eisner LLP and Amper, Politziner & Mattia, LLP, both of which had extensive public company and financial services practices. The combination creates the leading regional accounting firm in the northeast. EisnerAmper offers comprehensive accounting and business advisory services for a diverse range of more than 200 private equity funds, with portfolio companies in such industries as technology, media and entertainment, life sciences and financial services.
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