Ever wondered what the term “dry powder” means and what impact it has on your privately owned business? Ever wondered what private equity’s real return on investment was? Well, wonder no more as these topics and more are covered in today’s M&A Weekly Digest. Click on the headlines to read the full articles.
“Unfortunately it appears that we are going to be hearing a lot of misinformation about private equity and its focus during the next few months. I was thinking of this not long ago when one of the largest pension funds in the U.S. released its returns for the past fiscal year. Overall, CalSTRS [a pension fund representing the California State Teachers Retirement System] showed slight growth of 1.8% on its investments in its fiscal year that ended June 30…
Although the 1.8% return was far lower than their annual benchmark target of 7.5%, there was some really good news if you drilled into the components of the funds’ returns. One shining star was private equity, which generated an annual ROI of 5.9% in the last fiscal year. This data caught my eye because as we have discussed in the past, private equity is a critical investment vehicle for most pension funds, endowments, and charities.”
“As you know, there are lots of discussions in the M&A press right now concerning ‘dry powder’ or the private equity ‘overhang’…according to Preqin, the total overhang is approximately $900 billion…By any measure, this is a considerable amount of capital. Since a significant amount of this was raised pre-recession, in both 2007 and 2008, we expect to see acceleration in private equity activity over the next 12-18 months.”
“[W]e have decided to create an M&A hotline. By calling the Generational Equity hotline you will be able to have a private, confidential discussion with one of our M&A professionals about any topic relating to the M&A process. And we promise that this will not be a high-pressure conversation. Our goal is to efficiently and effectively answer any questions you have and not waste your valuable time.”
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