February 19, 2013
Interviewed by: David Snow
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PE Confidence in a Tough Market

Philip Bass of EY discusses some of the findings of the firms latest Capital Confidence Barometer, which measures the confidence of participants in the M&A market, including corporate as well as private equity respondents.

Philip Bass of EY discusses some of the findings of the firms latest Capital Confidence Barometer, which measures the confidence of participants in the M&A market, including corporate as well as private equity respondents.

Privcap: What was a key finding of the most recent Capital Confidence Barometer report? 

Philip Bass, EY: Private equity, I would say, was much more optimistic in a tough environment than their corporate peers. It’s surely not all good news. Private equity’s ability to transact in this environment without corporate playing, in other words, transacting, does impact the deals that are on the table. So there’s some concern from private equity around the quality and the number of assets available for sale in the next 12 months.

So private equity will have to continue to look hard for good opportunities, for good assets. That will be both within the mature markets as well as the emerging markets, the high growth markets. But I think private equity will be successful in the end and they ultimately will continue to transact and take advantage of the tough environment and look for opportunities in the tough environment.

Privcap: Why do you think corporate responses to the survey were so different to those of private equity respondents?

Bass: Well, corporate’s response was much more really around focusing on the bottom line. So really around organic growth, and really cost reduction, where I think private equity generally is used to playing in a volatile environment. That’s where they look for opportunities for growth. So they’re searching hard for assets that are down because of the market conditions that they feel like they can improve upon from an investment standpoint. So I think private equity generally, this is a great environment. I shouldn’t say great environment. It’s a good environment for private equity to play in. We’d all love more assets to be on the market, and hopefully that’ll come over the next 24 months.

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