Our current scope of work and ongoing initiatives with Private Equity firms throughout the United States confirms that the investment landscape Michael Milken spoke of in September 2017 remains as the prevailing scenario today: we are in the Golden Age of Private Equity.
Fundraising in 2017 was $637 billion in commitments, up 5% from 2016, and greater than the 2007-2008 previous market peak. The outlook for 2018 is to have another strong year, though US fundraising is lagging initial projections for a record-breaking year.
Given the large amount of available capital and near record limited-covenant leverage available, firms are (reluctantly) paying expanded multiples for new acquisitions. These increased valuations are forcing firms to employ all the value creation levers available, including operational and supply chain enhancements.
US Private Equity firms own more than 17,000 portfolio companies and, with more than 2200 acquisitions in 1H 2018 and less than 500 exits in the same period, PE firms are taking a much more active stance with their companies; bolting on acquisitions, professionalizing management, improving operations, expanding overseas, investing in game-changing technology and taking the time to grow organically.
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