I’ve been a bit preoccupied working on Buyouts’ latest quarterly issue as fall sets in and we inch closer to the fourth quarter.
Despite how busy the healthcare sphere has kept me over the summer months, the data shows that, across industries, there was an overall reduction in Q3 private equity activity in terms of both capital deployed and deal volume. Here’s my quick sense of industry sentiment following recent conversations with sponsors and intermediaries:
Sponsors point to continuation of many trends–whether that’s writing larger equity checks or reinvesting in companies owned in a prior lifetime. (GTCR just this morning invested in Cole-Parmer, again.)
But investors are showing more caution in the late stages of the cycle. There’s a lot of self-awareness in a valuation market where “assets are priced to perfection,” and just because competition and prices remain extraordinary elevated, “it doesn’t mean anyone can sell anything.”
The best assets will continue to command premium multiples; however, for many others, there’s a relatively big bid-ask spread. Meanwhile, buyers are also under pressure to deliver. Any miss from an execution standpoint can result in multiple compression, and that’s the reality, I’m told.
Stay tuned for more in our upcoming quarterly issue. Now, to healthcare…
Not all things are created equal
I learned this week that American Physician Partners, a provider of outsourced emergency department services to hospitals, recently kicked off a sales process.
For financials, adviser detail and more, read my full story.