The market for private equity firms is becoming more challenging, according to a new survey by Marsh, Mercer Human Consulting and Kroll.
Of the 100 private equity firms were surveyed, 79% cited increased competition as a significant barrier to making deals. Other private equity firms were perceived as the major source of competition by 63% of respondents.
The growing impact of pension schemes on balance sheets is highlighted by the fact that almost a fifth of respondents indicated they had exited a deal as a result of an under-funded pension scheme.
More than 80% of respondents said a lack of confidence in the management of target companies was a reason for pulling out of deals.
And more than half of the respondents cited the uncertain nature of liabilities as a reason for terminating bids.
Edwin Charnaud, European leader of Marsh's private equity and M&A practice, commented: “The private equity environment has changed significantly in the last couple of years. Competition for lucrative deals is acute, forcing many firms to work harder to stay ahead of their peers and to consider diversifying into new sectors and geographical markets. The risks associated with maintaining historic returns are therefore more pronounced.”
