Days of Reckoning Loom for Private Equity Purchases

Abstract

Increasing interest rates, skyrocketing energy prices, too much money chasing too few good deals and a failure to address fundamentally flawed business strategies—all of these factors may be hastening a day of reckoning for private equity fund portfolios. This article by Ronald A. Norelli, chairman with The Norelli Group, a strategy development and management firm specializing in service to private equity groups, shows how the next 18 months could well become a day of reckoning as the threats of higher interest rates, increased energy costs and too much debt exerts pressure on highly-leveraged companies in the portfolios of private equity firms.

TOPICS: Private equity, performance measurement, financial crises and financial market history, manager selection