BDO, an accounting and consulting firm, has released the findings from its second annual PErspective study, which involved the survey of over 100 senior executives at PE firms throughout the U.S. during November and December 2010. According to the study, while most PE professionals aren't expecting deal flow to bounce back to pre-recession levels, many do expect to close more new deals and deploy more capital in 2011 than they did last year.
The survey revealed that, in general, 2010 was good to PE portfolios. 70% of the surveyed PE professionals reported an increase during 2010 in the overall value of their entire current portfolio, compared to 51% who reported a decrease in last year's study. 30% even reported an increase of between 16% and 25%. However, despite the overall positive growth, only 10% indicated that none of their portfolio companies were performing below forecasts or expectations.
The majority of the respondents, 83%, reported that the companies acquired in 2010 were moderately to much better than those acquired in 2009 in terms of financial characteristics. Several of those 2010 acquisitions involved platform companies, as 74% of the PE firms deployed the most capital towards new deals. Only 6% replied that the most capital went to add-on deals, down from 27% in the survey from 2009.
Other survey findings include a continued rise in leverage ratios and a belief among the majority that, other than North America, Asia will have the greatest opportunities for new investments during 2011.
PitchBook assisted BDO in the conducting and analysis of the survey. To see the results, click here.