Private Equity: A bubble that will end badly (again!)

The Wall Street Journal ran a story May 29 on present sentiment in the private equity space.  Private Equity:  Is deal frenzy nearing end? quotes several principles of large private equity firms sounding caution.  Timothy Collins, CEO of Ripplewood Holdings LLC calls the current conditions a bubble that would end badly.  David Rubenstein of Carlyle Group warned “Greed has taken over.  Nobody fears failure.”

Other mid-market firms are saying its a better time to sell than buy at recent multiples.  The same article quotes Michael Psaros of KPS Capital Partners:  “This economy is not going to get better, especially for manufacturing and industrial companies.  We are selling everything that isn't nailed to the floor at prices that are between stunning and inconceivable.”  Risks have been magnified by sloshing liquidity in recent years that has thrown money on targets in buckets.  Prices paid have been obscenely high.  “Almost everything can go wrong now,” said David Bonderman, co-founder of TPG.

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