Restructuring experts are rubbing their hands at the prospect of European private equity-owned company restructurings more than doubling over the next 12 months in a survey by AlixPartners, the turnaround advisory firm.
In a sample of over 100 restructuring professionals in Europe and North America, two-thirds predict deal flow from European PE will grow by at least twice its current amount in 2010, with an additional 16% saying it will exceed even this.
Sixty percent of respondents believe access to credit and loans is the best way to improve the European economy, with 48% calling for tax cuts. The role of public spending split the survey, with 35% seeing increases as vital to economic recovery, and 30% wanting spending cuts.
David Lovett, a managing director and head of AlixPartners’ London office, added: “We have reached a stage in the European economic cycle where access to credit has become a chronic problem. Quick-fix financial engineering may have kept many businesses afloat over the past year while others, including many private equity-owned firms may have been hanging on hoping that credit conditions would suddenly improve. They haven’t and in the short-to-medium term they don’t look set to suddenly change for the better.”
Commercial real estate and the automotive industries were earmarked as the most likely source of turnarounds from one in four respondents, with the retail and consumer sectors of concern to just 10%, compared to 54% in the same survey last year. Companies in financial services are also regarded as more secure this time around, with just 7% worried about the sector in 2009, down from 37% in 2008.