AltAssets reports on the musings of Bruno Raschle, CEO of the private equity firm Adveq. Bruno makes a few points that bear repeating (because I agree with him!) with respect to the current economic environment and the private equity/venture capital industry going forward.
The up shot of our shared view is that what has happened, and continues to happen, will impact company valuations through what I expect to be an even deeper contraction (or correction, according to Bruno) of EBITDA valuation multiples, a reduction in corporate earnings due to lower GDP growth, and an increase in liquidity constraints, especially for those dependent on credit. What does that environment scream to you if you’re an investor? buy! Buy! BUY! Under these conditions there is likely to be a wider selection of potential portfolio companies to choose from, greater power on in-going valuation for the buyer, and greater availability of skilled human capital writ large. Now is the time to start making deals.
