Sky high valuations have created conditions necessary for the Private Equity Industry to Strike Back and complete deals at prices that could yet prove to be costly. But far from engaging in weird Jedi mind tricks that are hoodwinking investors, GPs are simply responding to market dynamics and let’s face it, the galaxy is hardly at threat if the odd deal or two goes awry. Some might compare it to a Ponzi scheme but this is an industry where performance has lived up to scrutiny so maybe it’s time to relax and have a drink in the Cantina Bar. Mine’s the first round!
Building on new foundations seems like an entirely appropriate theme for IPEM 2022 given the enormity of the shifting macro and geopolitical sands we are currently witnessing.
Acquisitions of pop artists’ music catalogues are proving to be quite a hit parade for private equity groups as they look to cash in on attractive royalties. Private equity and pop music seems an unlikely collaboration with the potential risk of being a ‘one hit wonder’…anyone still remember Chesney Hawkes? Firms like UK-based Hypgnosis Songs Fund are finding their Nile Rodgers groove and acquiring huge numbers of well-known songs to generate returns. They’ve just acquired Justin Timberlake’s entire catalogue for $100 million. That’s gotta be worth making a song and dance about!
We’ve all enjoyed a family evening playing Monopoly at least once in our lives, and it often ends with squabbles and vows of ‘I’m never speaking to you again!’ US buyout groups might find themselves in a similar situation as the Department of Justice’s antitrust division looks to end the high-stakes game of acquiring large corporations that have even the slightest whiff of ‘anti-competition’. The DoJ is rolling the dice on this, as it will be far from easy to enforce. But the fact it is training its sights on buyout deals could be enough to induce a PE community chest pain.
It looks like UK private equity firms have tapped in to their ‘inner Gallic’ sensibilities. Rather than get all hot and flustered at the prospects of Brexit for their European deal making, they appear to have responded with a swift shrug of the shoulders and a perfunctory ‘Meh’. During 2021, UK general partners charged across the channel to do business with their cosy neighbours, completing some 442 deals. One wonders what all the Brexit fuss was about. Like the cigar smoke on a late summer afternoon, it seems to have evaporated like a bad memory. That good old British pragmatism is alive and well!