Sunday, 11 November 2007

Private Equity deals face collapse

I see Jon Moulton of Alchemy has been his usual frank self on a panel at the Chartered Institute of Management Accountants conference on Friday. Good summary - Private Equity deals face collapse - in the Guardian on Saturday.

Basically, Moulton is echoing the view I have heard from others that, whereas Private Equity has been the main boost as buyers behind M&A activity in the last 12-24 months, current credit crunch 'troubles' will force many to force sell investments. As Private Equity is forced to become net sellers, prices will ease. Indeed, it will create good buying opportunities for 'conventional' trade buyers - which, frankly, I think is much more healthy.

Moulton's comments were rather franker than this as he was also widely reported as saying that there had been poor due diligence on many deals. "When many of the processes and controls are not there you have a high risk of serious errors and a sporting chance of fraud".

Footnote - I've known Jon for many, many years and have been involved in several of his IT investments. I look forward to sharing a controversial panel spot (yet again!) at the Regent Conference on 5th Feb 08.

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