According to a new analysis from Deloitte, general partners in the PE world will have to rethink their business and operating models in 2013 to manage regulatory, compliance, and tax uncertainties, as well as combat cost pressures by identifying operational efficiency improvements, and they will have to aim to pursue new growth opportunities amidst elusive exits.
– Deal making remains elusive as competition for quality investments is fierce, and those willing to sell are demanding higher valuations.
– Continued economic weakness and market volatility is clouding the investment environment, slowing the pace of initial public offerings, and making it more difficult for early investments to recover their value.
– The good news is that the industry continues on its upward trek. Assets under management climbed to a record USD 3 trillion in 2012, says Deloitte quoting statistics in an article from Dan Primack’s blog, and LPs are still attracted to private equity given the industry’s historic ability to generate returns across various economic environments.
– Adopting more technology and outsourcing will become more important to combat cost pressures. Deloitte say that those who have to tap the full benefits of improved technology capabilities will likely make up lost ground in 2013 as cost efficiencies emerge as a tangible lever to deliver alpha.