Summary of Private Equity Is Hot but Not Overheating

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Private equity investments have been on a growth trajectory since the late 1990s. In 2018, multiples are at record highs, and it’s getting tougher and tougher for investing firms to stay ahead as competition increases. But does that mean the market for private equity is due for a fall? Not necessarily, according to the expert view of Boston Consulting Group professionals. Though it never gives investment advice, getAbstract recommends this authoritative article to analysts, entrepreneurs and private equity investors.

About the Authors

Tawfik Hammoud et al. are professionals at the Boston Consulting Group.

 

Summary

Some observers have raised concerns about the continuing growth of the private equity (PE) market. Over 2017, average deal multiples rose to their highest levels since before the 2008 financial crisis. At the beginning of 2018, a crowded field of 2,296 PE funds was in the market to raise $744 billion, 25% more than at the same point in the previous year. Buyout firms had a record $628 billion in their war chests at the close of 2017. Leverage ratios are also in record-high territory, reflecting the intense competition for deals. All these factors portend the possibility of a correction. 

Despite the...


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