“If we had a perfect portfolio management, we’d sell every company that we had right before we went into recession, be completely in cash, buy everything again low and ride the cycle up. So bad times for us are not bad times the way they are for regular people.” So said Steve Schwarzman,
Despite the “mania” at the height of the recent boom, Schwarzman added: “We all expect at some point for the cycle to turn down and for us not to be as happy campers as we are now”. Indeed, the mood appears to be more decamp than happy camp of late, with fund managers presumably spending their time Facebooking one another and watching the tumbleweed bobbing along the streets of Buyoutsville.
According to one recent report, global deal values dropped by more than a third in Q3 of this year and there is a reputed US$300bn pile of underwritten debt commitments. Private equity is an opportunistic animal, however. “The greatest time to invest is when prices are low and people are afraid of selling things or afraid of financing things,” said Rubenstein, back at Charlie Rose. “Our business is to buy businesses at low prices.”
This could explain why
There have also been moves by the likes of
The point Schwarzman and Rubenstein were making back when private equity was approaching the apex of the boom is that the industry, or at least those in the top tier, is built to survive and not just adapt to but also exploit the peaks and troughs. Not so much locusts as cockroaches then, although it’s probably not a trade the PR-challenged industry would support. Chameleons, perhaps.