New York (HedgeCo.net) – EisnerAmper released the fourth edition of The Pulse of Private Equity, its biannual research report based on survey results from private equity fund executives. More than 110 fund managers in the United States responded to the survey which measured fund activity, debt availability, employment and portfolio fund activity, among other items.
In a turnaround from the last report of November 2011, private equity firm managers project greater activity for new acquisitions (up from 76 to 82 percent), and report they are spending more time on fundraising (up from 44 to 53 percent). They also predict sales or dispositions will be higher for the first half of 2012. Commenting about the uptick in activity, EisnerAmper Partner Chris Loiacono said that “Deal flow reflects the uncertainty of global upheavals and market volatility, but we feel that 2012 will show a rebound as investors come to grips with international debt issues, as well as with the new regulatory environment.”
The report shows a marked increase, since November 2011, in the activity of fund teams with regard to financial management at portfolio companies, which increased from 18 to 39 percent in terms of active involvement; and in regard to operational management which increased in activity from 10 to 38 percent. As EisnerAmper Chairman Howard Cohen points out in the report, “Whether it is an M&A strategy or increased attention to the composition of their boards, PE executives are immersed in the day-to-day.”
The Pulse of Private Equity confirms a trend seen in previous editions where managers view limited partners as having an ever-increasing concern about due diligence, fund terms, management fees and fair value. For the first time the Survey asked about LP’s interest in both Transparency and Fund Management’s Ability to Execute, with more than 90 percent of GPs saying that their LPs were highly interested in these two topics.
In terms of employment, 56 percent of respondents project hiring will remain the same while 37 percent project it to increase. Fully half will be hiring financial professionals and 55 percent said they would be hiring to improve operations. The survey also inquired about the level of dry powder which remains vast and aging, but declining in amounts to be called. While 28 percent of fund capital remains to be called, fully 60 percent of the capital is more than three years old.
If the industry finds itself on the cusp of a recovery, all fund strategies will be affected.
Peter Cogan, Partner and Co-lead of EisnerAmper’s Financial Services practice, concludes that fund performance benchmarking might be critical now and that “remaining competitive in a marketplace influenced by savvy limited partners and vigilant regulators will be the challenge of 2012.”
