An article this week in Yahoo! Finance by David Ramli (https://finance.yahoo.com/news/private-equity-faces-funding-squeeze-050616284.html) explains that there are signs that the PE bonanza of the last few years may be coming to an end. This would bring to a halt record years where cash-rich firms fueled growing businesses that sought buy-and-build strategies and spiked M&A activity globally.
Now it seems the ever-flowing wells of cash have dried up creating a competitive landscape for PEs looking to close funding rounds. If we add this to a number of other worrying economic signs such as rising inflation, dizzying drops in public markets and the softening of real estate markets, there is a looming sense of an economic slowdown. What does that mean for those companies seeking investment for their next phase of inorganic growth? Inevitably, funding will be harder to come by and profitability and clear competitive advantage will be preferred to some of the older metrics which only hinted at business success.
Further, it will be interesting to follow the trend alluded to in the article that consolidation of PE firms might be on the cards in the current funding squeeze.
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