May 16 2008
private equity deals moving westward
Not a surprise since I already did one post about how businesses are looking for investment (venture capital and private equity) opportunities in Asia, particularly China and India, as the U.S. economy sputters along. (see here) Well, this article entitled “The Changing Face of Private Equity” from CNN Money just reinforced that:
What a difference a year makes for private equity.
About this time last year, the industry was inking deals at a dizzying pace and raking in massive profits, making it the hottest game on Wall Street.
While private equity shops are still raising massive amounts of money, tight credit market conditions are forcing large buyout shops to rethink the business model that brought them so much success in years past.
As a result, the private equity heavyweights like Blackstone Group, the Carlyle Group and KKR are having to adapt.
For instance, since late last year, buyout firms have increasingly targeted smaller acquisitions, experts like David Brophy, a finance professor at the University of Michigan’s Ross School of Business, said.
At the same time, the big private equity players are increasingly scouring the globe for investment opportunities, said Paul Schnell, a partner in the U.S. and international mergers and acquisitions group at the law firm Skadden, Arps, Slate, Meagher & Flom LLP.
Firms like the Carlyle Group have ramped up staffing in emerging markets like India, China and Latin America as part of an industry-wide push to find companies with strong growth prospects, he said.
“Increasingly private equity funds are looking outside the U.S. because they are finding a lot of companies with much greater prospects of significant growth,” said Schnell. “They can do these deals with less leverage but with significant returns.”
This is goods news for the corporate lawyer folks (emerging companies, private equity, and M&A) doing international deals. Nothing new though. Expect to see more deals in the pipeline for your law firms in international law. And for the non-lawyers, expect to see more and more news in the headlines of this nature.
