As the stock market struggles to find even ground, private equity investors in search of good deals may be in luck as trouble in the initial public offering market denies companies one way of raising cash and forces deal prices to fall.
Earlier in the year, some buyout firms were putting new deals on hold to focus more on exiting existing investments given what they saw as a dearth of good opportunities. But the teetering of the IPO market and concern that the window for good sales may be closing could be a boon for private equity buyers who had begun to worry that there was too much competition for too few deals.
“In the long term, this is good for PE,” said Howard Berkower, a partner with the corporate practice at McCarter & English LLP. “It will make everyone take a breather, and one result of the tumult could be downward pressure on pricing.”