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Private Equity Executives Survey 2011 - Observations

The Pulse of Private Equity - Spring 2011 

Several observations for private equity funds emerge from the data. We encourage you to consider these observations in relation to your own.

  1. Benchmark your activity. Review the data and compare it to your firm’s outlook to identify similarities and differences from the respondents. Benchmarking is a useful methodology for comparing your firm’s activity level to a peer sample.

     
  2. Right around the corner. Over the past year our data has shown the trend toward an increase in fund raising activity, debt financing and a meaningful increase in hiring. This trend is likely to continue and fund managers should consider that, as the market accelerates its growth in a period that appears to be right around the corner, you may be faced with a marked increase in the competition for financing and talent.

     
  3. Portfolio company management will require additional talent. As funds continue to increase their headcount, it will bear watching exactly what kind of talent they will be hiring. As funds show no sign of loosening their control over portfolio company strategy and operations we expect the funds to hire more professionals with expertise in operational business management, sales & marketing, even human capital to augment, better monitor and in some cases even take over these functions at their portfolio companies.

     
  4. Safe sectors rule. Money flocks to where it feels safe and where there is at least a perception of reliable growth and successful disposition. Meaning that we see a continued trend in the diversified funds of investing in industry sectors that are “safe”. Examples are healthcare, business services, other business-to-business B2B and information technology.

     
  5. The LPs’ magnifying glass is on you, for good. Developing close LP relationships built on transparency and trust is paramount. Gone are the days of casual investors. Due diligence by the investors will steadily increase the pressure on the private equity management teams to perform.

Spring 2011 

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