PE pros debate when buyout deals will return

At The Deal’s 2009 PE Outlook Conference in New York last week, a panel of private equity pros were asked when they think confidence will return to the market. Their answers ranged from optimistic to pessimistic.

Martin Mannion, a managing director at Summit Partners, said that the time is now. “With discipline, we are seeing the confidence to do deals now.”

Jonathan Colby, a managing director at The Carlyle Group. said, “It will probably be the second half of next year before we see any real activity.”

Nicole Arnaboldi, chairman of DLJ Merchant Banking Partners, said, “It’ll be a multi-year crawl back that will start in the middle market.”

Bruce Bowden, head of M&A at Nokia, said, “The end of this year will be a disaster, and for anything to start looking up, we’re going to need a sign. It could be late into next year.”

The panelists also shared thoughts on the role of President-Elect Obama’s administration in confidence-building and bailouts.

Arnaboldi said that the government will need to be clearer about its plans for companies receiving bailout money. “You can’t buy a company that would compete with a government supported bank,” if you don’t know the plan and direction it’s taking, she said. However, she added that the new administration will be relatively hands-off with the bailed-out banks’ operations.

Colby said that it makes no sense for the government to isolate its bail-out efforts to the financial services industry. “Why just bail out Wall Street,” especially when other industries are also suffering? he asked.

Mannion of Summit Partners echoed that sentiment: “It’s easy to say, ‘Let the Big Three go under,’ but that move would lead to a 1% job loss.” He said the auto industry could benefit from the private industry strategy to improve its long-term prospects, along with the government funding, which would help in the short term. —Erin Griffith