Looking only at the deal-making statistics for 2013, one might easily conclude that the PE industry is still in the doldrums, with deal value and count little changed from prior years. And while it is true that pricing and competitive conditions make it challenging to get good deals done, other forces are strengthening the PE industry and will help propel winners forward over the coming year.
Exits are increasing, and ubiquitous dividend recapitalizations and a flurry of post-IPO follow-on sales are putting huge amounts of capital back into LP coffers. In fact, many LPs have had net positive cash flow from their PE investments for the past two to three years. This happy result also creates a problem: LPs’ PE portfolios are now shrinking in many cases, resulting in a decreasing allocation to their best-returning asset class.
Source : Bain & Company