Are These the Vintage Investment Years? ; Time to Invest? Gary Ecob, Partner at Orbis Partners, Gives His Take On the Timing

Summary

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According to data recently released from CMBOR, the third quarter of 2009 reached an all time low in private equity deal completions for over 25 years. If you add to this the low deal volumes in the first half of 2009, thenmostmarket statisticsmake depressing reading. So is now a good time to invest into businesses, or better to avoid them? Theprivateequitycommunityseemsto be polarised in its opinion, with a few completing most of the deals and some investing littleornothing. Inmyopinion, now is the time to invest.

It's now more difficult tomake the returns work as super profits have been achieved in the past by using financial engineering, on the back of high debt multiples. This doesn't work in the current environment. So, a business strategybasedaroundcostcutting inorder to achieveprofit improvementalonewillnot attract the investment. In order to deliver a healthier bottom line we need to focus onceagain, onhowtoimproveprofitability in a flat or declining market. So it's back to good old fashioned business principlesandgrowthstrategiesthatwin market share. The better management teams can create these and should still attract investment.

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Extract

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Are These the Vintage Investment Years? ; Time to Invest? Gary Ecob, Partner at Orbis Partners, Gives His Take On the Timing

So why are so few deals being done? Is there a lack of quality businesses? The good businesses are still out there and they become evenmore noticeable In the current economi...

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