BCSF - Buyout Shops Take Risky Exit To Bypass Deal Crash
2024-03-15 17:20:00 ET
Summary
- Buyout firms have an even bigger problem than finding a place to park fleets of armored cars heaving with cash: what to do about their idling truckloads of portfolio companies.
- Clearing the backlog is a gargantuan task. More than $3 trillion of unsold investments are sitting inside private equity firms, according to a report issued this week by consultancy Bain.
- The surge in benchmark interest rates stymies the ability of buyers to borrow, while seesawing markets make it harder to agree on valuations with sellers.
By Breakingviews
Buyout firms have an even bigger problem than finding a place to park fleets of armored cars heaving with cash: what to do about their idling truckloads of portfolio companies. The two main avenues for returning money to increasingly itchy investors are largely blocked. To get around them, the existing owners are going down the road of cashing out backers while keeping assets. The problem is that more traffic will make this route riskier....
Buyout Shops Take Risky Exit To Bypass Deal Crash