Rothstein Kass Publishes "Private Equity in 2011" Industry Trend Report

ROSELAND, N.J., May 18, 2011 /PRNewswire/ -- Global professional services firm Rothstein Kass (www.rkco.com), has published "Private Equity in 2011," a sector trends report that features the findings of an Internet survey of 207 private equity fund managers. Conducted in January 2011, the survey covered issues ranging from fundraising intent to regulatory concerns.  Sixty-five percent of managers participating worked at funds with assets under management (AUM) below $500 million, with 35 percent indicating AUM in excess of $500 million.

Among notable findings, nearly 80 percent of respondents indicated that there will be more attractive investment opportunities in 2011 than in 2010. Meanwhile, 67 percent suggested that there will be increased IPO activity by private equity portfolio companies this year. While a more stable economy and thawing capital markets are contributing to a general sense of optimism, managers polled also acknowledged challenges ahead. Roughly 45 percent of respondents indicated that the credit crisis would continue into 2012 or beyond. Nearly 86 percent agreed that provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act will increase compliance costs for private equity funds.

"Interest in more direct participation in portfolio company management emerged primarily from necessity, but the trend has continued to intensify even as uncertainty regarding exit strategies has started to diminish. In addition, more than half of managers predict that private equity firms will more frequently retain post-sale equity stakes," said Tom Angell, Principal-in-Charge of the Rothstein Kass Private Equity Practice. "Many firms have relied on vertical industry expertise as they have taken a more active role in the tactical direction of portfolio companies, streamlining operations to unlock latent value over the duration of the investment. This specialized knowledge is also helping private equity firms to identify middle-market investment opportunities amid strong competition for assets from strategic buyers looking to grow market share through acquisitions."

"Private Equity in 2011" provides segmented and aggregated responses based on AUM. Among notable findings:

• Only 18 percent of survey respondents believe that it will be more difficult to raise capital in 2011 than in 2010
• More than three-quarters of managers expect downward pressure on fees
• Forty-one percent of private equity managers indicated that terms for capital will be less favorable in 2011
• Nearly 70 percent believe that private equity firms will more frequently use outside consultants to understand the shifting regulatory environment
• Private equity firms will become more intricately involved with portfolio companies, according to 82 percent of managers polled
• According to 62 percent of managers surveyed, private equity investment will become more strategic in 2011
• Seventy-three percent of private equity fund managers expect purchase prices for acquisition targets to increase in 2011
• Private equity funds will more frequently invest in distressed situations, according to 58 percent of managers
• More than half of managers surveyed predict that private equity firms will more frequently form consortiums to pursue "club" deals

"Our 2011 survey showed strong fundraising intent, as you would expect of a sector in the early stages of recovery. Roughly 30 percent of managers plan to increase AUM by 25 percent or more. It's significant, however, that 40 percent are not actively seeking new investment capital in 2011. Many funds are sitting on substantial capital and report that the availability of suitable opportunities will be the greatest factor in the pace of deployment," said. Mr. Angell. "That, in itself, is cause for some optimism. In reality, the deal pipeline was not stifled by a dearth of attractive businesses. Instead, the market downturn created vast differences in how sellers valued these businesses and what buyers were willing to pay. Sustained capital market recovery will create better terms of capital and allow private equity firms to leverage investments to generate returns, attracting more private equity capital from the sidelines and supporting higher purchase prices."

About Rothstein Kass:

Rothstein Kass is a premier professional services firm that has served privately held and publicly traded companies, as well as high-net-worth individuals and families, for more than 50 years. As trusted advisors to our clients, Rothstein Kass provides accounting, auditing and tax services, as well as a full array of integrated services, to clients across industry spectrums and in all stages of organizational development. At the core of Rothstein Kass' remarkable success lies our commitment to hiring, developing and retaining employees that represent an entrepreneurial spirit mirroring that of the sophisticated business and financial services communities that we serve.

The Rothstein Kass Private Equity Practice provides essential and complementary professional services to private equity and venture capital funds and their portfolio companies across industry segments. The professionals of the Private Equity Practice advise clients on all aspects of private equity transaction, including financing and deal origination, as well as on organizational structure, audit processes and the management of operational and tax matters.

SOURCE Rothstein Kass