The global private equity (PE) industry posted another solid year in 2017, as buyout value and exits both showed healthy gains. Firms closed out the strongest five-year stretch for fund-raising in the industry’s history as limited partners (LPs) continued to respond to PE’s outperformance vs. other asset classes by flooding the market with new capital. Growing investor enthusiasm produced the largest buyout funds ever raised in the US, Europe and Asia, and served as a ringing endorsement of the industry’s prospects in the years ahead. But it also intensified the pressure on general partners (GPs) to keep the good times rolling.
That won’t be easy. While GPs worked hard to put all their new capital to work, they continued to run into roadblocks that limited the number of deals closed during the year. Heavy competition for assets and record-high deal multiples made it increasingly difficult to find new targets and close new transactions at attractive prices, a trend that has put downward pressure on deal numbers for the past several years. As we’ll explore in greater depth in Sections 2 and 3, the challenge in the years ahead will be to find new ways to generate growth and underwrite value. In 2017, however, the industry had plenty to celebrate.
Source : Bain & Company