U.S. private equity buyers on the hunt for good deals are casting their nets wider and looking at deals far smaller than those they typically pursue — often to the detriment of smaller competitors, experts say.
As some of the biggest private equity investment groups look to invest cash out of funds with tens of billions of dollars in competitive capital, many are finding a dearth of opportunity of equal scale as a strong stock market means valuations are high and as solid corporate performance in the post-crisis years leaves little room for improvement.
“Some of these funds are getting back to their roots, in a way,” said Howard Berkower, a partner with the corporate practice at McCarter & English LLP. After years of moving into bigger and bigger deals, some mega-funds are now returning to the smaller deals off of which they originally made their name, he said.