Private equity fund managers believe pricing will be their most significant challenge in 2014, according to the fifth annual PErspective Private Equity Study by BDO USA, an accounting and consulting organization. The study involved a national survey conducted by PitchBook, with responses from more than 100 senior executives at private equity firms throughout the U.S.
When asked to rank the challenges private equity firms will face in the coming year, 39% of fund managers cite pricing as their most significant hurdle, a marked uptick from just 15% of respondents who said the same in last year’s study. The second largest percentage of fund managers (34%) say the identification of quality targets will be their number one challenge in 2014 (up from 28% in last year's study), pointing to ongoing concerns about deal flow in the wake of a slow year for private equity deal sourcing.
Despite anticipated deal flow challenges, 2013 was a robust year for private equity returns, with three in four survey respondents seeing the value of their entire portfolio increase during the past 12 months, an 11% uptick from the year prior. Only 12% of fund managers report a decrease in the value of their overall portfolio (down slightly from 15% last year).
To see more findings from the study, including the mixed outlook for hiring, click here.