3 Trends Happening in Private Equity

According to the annual report of American Investment Council (previously known as the Private Equity Growth Capital Council), 3 emerging trends will affect PE firms during 2016:

1. Valuations will Remain High
   Good quality, well prepared businesses are still attractive to private equity forms (many of whom are still ‘cashed up’).
2. Increasing Equity Contributions
   This partly reflects banks’ more conservative lending stance, as well as high cash levels.
3. Co-investment
   Lots of firms seeking to diversify and spread risk (as well as resources) by co-investing.

In the Australian market, recent negative publicity (mainly around Dick Smith) has seen only a rise in percentage of all deals in Australia involving PE (roughly 25% in United States and United Kingdom). This suggests there is scope for expanded activity in PE in Australia, despite the majority percentage of Australia’s deal flow being weighted heavily towards infrastructure, real estate and resources (three areas where PE is typically less active).

There has been a recent uptick in activity largely facilitated by an increased level of interest from international corporations particularly around the areas of materials, finance, health and education.

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.