Private market valuations exceeding 2007 levels

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One of the more important issues that private equity firms face today is one that should feel familiar to public market investors; overvaluation. In the US, the average buyout valuation was 10.9 times EBITDA in 2016, which exceeds 2007 peak despite lower levels of leverage.

“We are starting to get to lofty valuations in the US, Europe, and even Australia.” Even in its area of the market in growth capital, which is less prone to overvaluation, it is seeing expectations that are significantly above ‘through the cycle’ averages.

"Entry valuation is one of the key drivers of returns. There’s a sense that when we’re exiting current investments in five years’ time, we may not see the asset price environment in the same state as today"

In today’s video, Nick Dignam, Investment Director at Blue Sky Private Equity, discusses two of the biggest issues facing private equity in Australia.

For further insights from BlueSky, please visit their website


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