In the second quarter of 2009, middle-market private equity continued the slump in activity we saw in the first quarter. Based on market data and our own observations in the marketplace SDR has identified 3 strong themes for the second quarter. Specifically,
- Deal Volume has Slowed – In the second half of 2008, GF Data Resources’ 128 contributing Private Equity firms reported 60 completed deals. For the first half of 2009, this figure dropped drastically to just 21 completed deals. A major contributing factor to the depressed volumes is the lack of leverage capital available. In fact, the second quarter deals were completed with 62.9% equity financing, up from 50.9% in the first quarter.
On both a local (Front Rage of Colorado) and national level, SDR has sensed a market paralysis with almost all players waiting for the perceived bottom. However, with significant pent-up capital and dealflow, SDR is confident that deal volume will increase dramatically through the balance of 2009 and well into 2010.