Private equity firms are being stymied by companies reluctant to sell out in case they’re seen as having done badly out of the deal, according to John Eydenberg, the global head of financial sponsors coverage at Deutsche Bank AG. (DBK)
“People don’t want to have sold to private equity and see private equity make substantial returns,” Eydenberg said on Bloomberg TV’s “Inside Track” with Erik Schatzker.
There’s a lot of cash in the hands of private equity firms such as Washington-based Carlyle Group LP and New York-based Blackstone Group LP (BX), “but unfortunately we don’t have a lot of sellers,” he said. “That’s the problem -- that we can’t tease out folks to sell their assets to private equity.”
Eydenberg, who’s based in New York, said he expects a “pretty significant expansion” in initial public offerings as private equity firms divest themselves of companies they’ve bought. After about $30 billion of IPOs this year, he said, sales may reach $45 billion in 2012. Firms may also start to hold assets for longer than the five-year average, he said.
One area of growth may be the middle market.
“If you look right now, there’s probably only a handful of assets for sale that are attractive to the big private equity firms,” Eydenberg said. “Smaller private equity, there’s a few dozen companies that are for sale.”
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