Is The Glass Half Full or Half Empty

03.19.2011 - Private Equity

A Real Conundrum Given a Surfeit of Capital and a Paucity of Investment Opportunities

Things are starting to lookup in the world of private equity – a sure sign of spring some might say and a thawing of the market. The good news is that both transactions completed and the capital invested in 2010 was up from 2009. One has to wonder, however, how much of the increase a one-time phenomenon was with owners rushing to sell their companies before the expected expiration of the Bush tax cuts in December. The bad news for private equity funds is that the increase in capital deployed pales in comparison to the amount of capital that has been raised. As noted in the February 28, 2011 Churchill Financial’s weekly snapshot of deals and trends in the capital markets “On The Left” there is a $500 billion overhang of private equity capital waiting on the sideline. In theory this should bode well for owners of middle market companies given the life-cycle of private equity funds which will increase the pressure to put capital to work sooner than later

Source – PitchBook Data

Recently Completed Private Equity Transactions

Access Value Investors acquired Collins Brothers, a distributor of specialty beverages

L2 Capital Partners acquired Landfill Service Corp. a developer of environmental solutions

Pfingsten Partners acquired Superior International a manufacturer of recreational products

Signal Hill Equity Partners acquired Westridge Cabinets, a manufacturer of cabinetry

Blackland Group acquired Kessington Machine Products specializing in precision machining

Pine Brook Road Partners acquired United PanAm Financial a provider of auto financing

Arborview Capital acquired Drexel Metals a provider of energy efficient metal roofing systems

RFE Investment Partners acquired Plantation Products, a supplier of flower and vegetable seed packets

Wind Point Partners acquired Nonni’s Biscotti business

Tonka Bay Equity Partners acquired Checkers Industrial Products a manufacturer of safety products

a real conundrum given a surfeit of capital and a paucity of investment opportunities