PE Optimism Driven By Increased Liquidity and Deal Flow ; Rothstein Kass Survey


June 14, 2013

Private Equity firms are predicting strong returns and hoping for more investment opportunities despite heightened competition and ongoing regulatory pressure, according to the latest  Rothstein Kass private equity outlook survey.


There is a new optimism driven by the recovering US economy and an anticipated liquidity boost from increased exit opportunities, along with a strong belief that there will be more attractive investment opportunities in 2013 than there were in 2012. The majority of the survey respondents are US-based (83%) with Europe and Asia combined representing a little over 8%.

Other findings

  • The overwhelming majority of firms polled (80 percent) are targeting double digit returns for 2013. Only eight percent of firms are targeting returns between five and ten percent
  • More than three quarters of respondents (78 percent) believe there will be more investment opportunities in 2013 than there were in 2012.
  • Co-investment will likely increase in the months and years to come, creating both upside and downside for general partners and investors
  • Roughly five percent of those polled currently face an “invest it or lose it” situation with un-deployed cash
  • Regulatory pressures, tax uncertainty and fee pressures weigh on the minds of most firms according to the survey. In fact, 79 percent of respondents believe that private equity funds will more frequently turn to outside consultants to understand evolving regulatory demands.
  • More than 60 percent of the private equity respondents believe there will be more exit opportunities for portfolio holdings in 2013 compared with 2012. Nearly 58 percent agree that there will be increased initial public offering (IPO) activity this year. However, those polled were almost unanimous in their belief that mergers and acquisitions (M&A) activity will provide the lion’s share of liquidity in 2013. (Image source: RK)
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