Chapter 1
Introduction and overviewa
1.1 INTRODUCTION
In recent years the profile of the private equity industry has increased dramatically. While the industry has been actively investing in companies across a wide range of industries for several decades, the combination of astute buying by private equity funds focused on buyouts in the early part of the last decade and the extremely liquid credit markets of 2004–2007 fueled some impressive exits. Similarly, private equity funds focused on venture investments had very successful exits in the late 1990s. These exits helped to substantially increase the profile of the industry.
Over the last 20 years or so private equity has grown to become a sizable asset class at its peak, responsible for up to a quarter of global M&A activity and as much as half of the leveraged loan issues in the capital markets. At the top of the last cycle, private equity funds found themselves able to acquire very public assets and seemed to be able to deliver extraordinary returns, both for their investors and for their managers. This “institutionalization” of private equity saw its profile rise substantially with a number of commentators focusing on this “new” industry.
Towards the end of this decade the industry, like every other, had to weather the financial crisis. During the crisis a number of new private equity investments fell dramatically, despite the historically high level of capital commitments made to private equity funds. The prevailing economic ...
