Private Equity (PE) has always been a fast-evolving industry, and 2014 is proving no exception. Early forecasts for U.S. growth in 2014 were quickly tamped down in the first couple of months of the year after fourth-quarter 2013 GDP numbers came in lower than expected (a 2.4% annualized rate versus the 3.2% forecast). With once-stalwart emerging market economies now sputtering, hopes have been dampened some for new PE investments, and emerging markets will not support many portfolio company sales.
But speakers at the Wharton Private Equity & Venture Capital Conference 2014 said that weaker-than-expected economic growth may at least have the virtue of uncovering some diamonds in the rough. Uncertain growth is also causing investors to get choosier about their PE investments. Expect money to gravitate toward large firms with solid track records, and also towards niche firms that offer a unique approach. Firms in the middle could get squeezed.
This edition of the Wharton Private Equity Review looks at these issues and also considers developments in venture capital, where panelists said there are fewer attractive late-stage firms. One company, meanwhile, is pushing the bounds of innovation by creating a “private” social media network so its 200 portfolio companies can share knowledge and increase their value.
Read the full report on Knowledge@Wharton.