What the credit crunch means for private equity

After the sub-prime squeeze, many investment and commercial banks have been left with a significant backlog of debt. The clean-up commences…

Following the turmoil in the credit markets, it comes as no surprise that there has been a significant impact on the private equity sector. The severe collapse in US sub-prime mortgages was the catalyst for the crisis and led to a substantial repricing of risk and a severe liquidity squeeze. As the squeeze tightened, many investment and commercial banks were left with significant backlogs of unsyndicated loans/debt following agreements to fund the large number of private equity deals that have taken place recently. The impact of this has led to fewer buy-outs by private equity firms, in...