Speaking at the Dow Jones Private Equity Analyst's
Limited Partner Summit, Michael Hermsen, a managing director at Babson Capital Management, voiced concerns about the returns delivered by general partners.
"Over the past few years, increasingly general partners are getting rich off of fees, but not as much off of profitable deals," Hermsen said. "[My biggest concern is] making sure that when a GP does well that the LPs do very well."
And in the current downturn, it's getting increasingly difficult for private equity managers to get good deals done, at least until valuations fall. "[The current] acquisition prices can't be supported. So there will probably be a time until prices come down, returns won't be all that spectacular. Looking at historical experience, it takes nine to 15 months for sellers to adjust to the new reality," he continued. "We're probably another six months away from that happening." -
George White
See Limited Partner Summit Web site
