PE Firms Now Sitting on $1 Trillion ‘Dry Powder’ – Where Are Investment Opportunities?

According to Bloomberg, pivate equity firms have amassed $963 billion in funds that they are looking to invest. Why has dry powder risen to almost a trillion dollars, where are the investment opportunities and what can PE firms do about lack of deals?

Funds available to invest have risen from circa $250 billion in 2001 to nearly four times that figure now. The reasons are many but Bloomberg claim that the main reasons are that private investors have been pouring money into PE firms are a) because investors are chasing yield and b) PE firms are finding it harder to reach deals in a market with very high asset prices.

There are other challenges as well, of course. For one, family offices are increasingly doing deals in the space that was, in the past, prime PE territory.

Given that total assets currently under management are in the range of $2.6 trillion, current funds looking for investment are running to over a third of the funds already invested. This is unsustainable in the face of current PE management fees.

For business sellers this is, of course, good news. How badly do your PE buyers want your business? How much pressure are they under to invest funds? Is this an opportunity for better completion prices? Let us know in the comments below.