Coller Capital just released the latest edition of their twice-yearly Limited Partner survey. The LPs believe that 23% of buyout firms will be unable to raise a new fund in the next seven years-- in other words they will go out of business.
That's not surprising when 84% say they have declined to re-invest with one or more of their existing GPs over the last 12 months (in Summer 2005 the figure was just 45%).
It's depressing stuff, but still a lot less gloomy than the doomsday industry meltdown that BCG was predicting last year.
I have to think that partners at some of these firms are debating whether to slit their wrists or hang themselves. Many of them have two options 1) stay at your current firm where your out of the carry or 2) start your own firm in an environment where the cost of capital has never been higher and there is a general flight to quality. Good luck.
Posted by: Mark | June 17, 2009 at 03:20 AM
If it's one thing that PEs and VCs have exposure to, it's that entrepreneurship is the holy grail. You need a certain risk appetite, and you have to be willing to work hard, but it's an obvious path of succession for jaded PE pros at firms that are floundering.
Posted by: David | June 17, 2009 at 03:25 PM
With regards to your question: yes, absolutely. Especially so in Asia. http://nemoincognito.blogspot.com/2009/06/big-ticket-private-equity-in-asia.html
Posted by: Nemo Incognito | June 18, 2009 at 04:19 PM
My team at http://www.ieconsulting.co.uk conducted this work for Coller and we feel that one thing playing a huge part in the reduction of auto-re-ups is the serious focus that LPs are placing on due diligence at the moment. They are also spending a lot of time looking at their existing portfolios. It's always dangerous to underplay the influence that LPs have on the strength of the PE industry...
Posted by: Matthew Craig-Greene | June 20, 2009 at 01:47 AM