The first half of 2016 was a bit rocky for the private equity world, but plenty of deals were still inked, numerous funds were still raised and experts say the industry could have a strong second half of the year.
There were more total private equity deals made in the first half of this year when compared with 2015, according to data from research firm Preqin, although 2016’s deals were worth a combined $66.5 billion less than last year. Meanwhile, the opposite is true when it comes to fundraising, with more funds closing in the first half of last year but more combined money raised this year.
Looking downmarket can have benefits beyond just snagging a solidly run company that has the potential to generate strong returns in an exit down the line, according to Howard Berkower, a partner with McCarter & English LLP’s corporate practice. That’s because it can fortify an overall platform, which will lead to an exit that makes investors happy, and happy investors are more apt to invest with a given firm again.
“Generally speaking, the strong get stronger and the weak get weaker,” Berkower said. “People who have the most success fundraising are those that can show good exits in terms of good returns. Those will be able to generate additional funds more easily and quickly than those that don’t have established records.”