Navigating the New World of Private Equity—A Conference Summary
Last Updated: 10/22/08
On This PageNovember, No. 256a
The Federal Reserve System’s Private Equity Merchant Banking Knowledge Center, formed at the Chicago Fed in 2000 shortly after the passage of the Gramm–Leach–Bliley Act, sponsors an annual conference on new industry developments. This article summarizes the 2008 conference held on July 9-10.
The recent financial turmoil has
dramatically altered the landscape for
private equity, particularly in the buyout
sector. The diminished outlook for corporate
profitability has altered projected
returns and payback periods for investments
in both the public and private domains.
Leverage is less available and less
attractive as a financing source for transactions. Financial institutions have reacted
to stress on their balance sheets
by tightening terms, raising prices and
reducing the availability of credit.
Despite these challenges, the faltering economy and the
perception that investors may have overreacted
to it have broadened the pool
of opportunities for private equity firms.
Newer opportunities include investing in
financial institutions and clean technology
and buying distressed loans and securities. In this way, private equity firms
have contributed to restoring markets
and economic activity to normality.
Register to receive email alerts when new issues are published.