US private equity funds raised $130.1B (326 funds) in the
first three quarters of 2012. Impressive...as
this amount nearly matches the capital raised in all of 2011 ($131.5B).
"Although it's far from easy to raise capital today, more
private equity firms have the wind at their backs than [they] did even a year
or two ago." said Laura Kreutzer, managing editor of Dow Jones Private Equity
Analyst.
Europe is also enjoying an upswing with a 20% increase in
capital raised through the first three quarters of 2012 over last year. >>Read more
While current funding continues to be robust, US private equity
executives face a ticking clock over funds raised in 2007 and 2008. Nearly $200B needs to be spent within
the next 12 months or it must be given back according to a recent NY Times
article "More Money Than They Know What to Do With".
Due to economic uncertainty, there has been a "wait and see"
approach to deal making. However,
the looming deadline is prompting a more proactive approach with firms
realizing that it’s time to spend... Clearly, firms are on the trail of the deal, with some engaged in
“elephant hunting”, that is, seeking deals worth $10B. Collectively, PE firms have already spent
$45B in the third quarter alone according to deal tracking source, Capital
IQ. In this environment, Sellers are the Winners...as inflated acquisition prices
are a likely result with so much competition for a
limited number of deals.
Keep an
eye out for mega deal headlines...and an accelerated pace for deals.
