First off, a lot of private equiteers are resenting deals done at the peak of the market. The peak was characterised by abnormally high earnings and abnormally high multiples. Since both of these characteristics are inputs into price, the prices paid recently were doubly inflated. So, now many of us are trying to fix deals that represent retrospective multiples of over 10x earnings. 

Put that negativity to one side for a moment (which isn’t very easy in practice) and we have a market ripe for great deal-making. Earnings in many industries are at cyclical lows, multiples are also at cyclical lows, plus there are a few distressed sellers trying to sell good assets to support bad assets. All of this makes for great deals; it’s just a matter of managing this process while managing the rest of the portfolio.

With both of those points made, it’s a great time for newly formed funds that don’t have the baggage of underperforming investees. For the rest of us, I think it is crucially important to understand how valuable this landscape is for our funds. We’re all so worried about our current investees (and rightly so), but the opportunities available now could conceivably have much more impact on our overall performance. Just to make the point again, I’m not suggesting that we leave our existing investees to twist in the wind, just that we should not let once in a lifetime opportunities pass us by.