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The private equity industry is heading for tougher times, according to a survey of business leaders conducted by consultancy McKinney Rogers. Respondents expect the market to show zero net growth over the next 12 months and grow ‘only a little’ for two years after that.

The credit squeeze is cited as the chief cause, with 71 per cent of respondents believing it will have a large impact on the industry, while some 68 per cent think that general economic uncertainty will affect private equity’s growth.

Regulation of one kind or another, including Sarbanes-Oxley and MiFiD, is expected to contribute to poor growth by around half of the survey’s respondents.

The study, which interviewed 58 business leaders in four continents, chimes with the popular belief that Asian markets will be less hurt by the credit crunch. Respondents in the Asia-Pacific and Africa expect the tightening of credit to have less impact on private equity investment than those in the US and Europe.

On balance, respondents feel that private equity firms make companies ‘leaner’ and more competitive, with 47 per cent agreeing and 23 per cent strongly agreeing with this statement.

However, two-thirds of respondents believe private equity firms put making ‘large profits’ ahead of employees’ welfare, and 57 per cent state that the industry should address its ‘negative’ public image as a matter of urgency.

Comments [1] 

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Comment by Dimitrios Philippelis at 3:02pm, 12 Apr 2008

If ETFs are the vehicles used to have the Private Equity Funds or Firms to go public then the stagnation you are referring to in the caption may not be the appropriate word to describe ETFs performance.