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The Deal's M&A Outlook 2009 conference started Tuesday with a panel of dealmakers sizing up dealmaking going into 2009. Jonathan E. Colby, a managing director at the Carlyle Group, said that he sees private equity deals continuing to be slow well into 2009. "There's really no incentive for us to do anything now," Colby commented. "We just have to sit tight and hope some liquidity come into the market next year."
"We're hunkering down. Returns are going to come down just because of how long we're going to have to hold these companies," Colby said. "We won't see any meaningful deal activity in the market until the second half of next year." And with deal activity gone, so are the prospects of a Carlyle IPO. "While it's something we looked at last year, there's no reasonable prospect for doing an IPO for a firm such as ours. The model doesn't work particularly well for our industry, since we advocate building the business outside of the public market. That option is off the table." Still Colby does see two areas that remain ripe for M&A activity, even in this environment. "There are two areas we see as interesting. The first is energy ... and healthcare is another, with the new administration coming in." With markets in turmoil, Colby said Carlyle is concentrating on getting its portfolio companies prepared to withstand the slowdown. "Operating expertise is critical right now in order to get these companies through the current environment," he said. Colby did admit that some limited partners have been rocked by the stock markets as well. "Some large LPs are asking for a slowdown in capital calls, but since we're not doing many deals, we're kind of meeting that, so it's not too much of a problem," Colby continued. "On the other hand, some LPs are saying if one of your limited partners can't make the capital call please let us in." - George White See all M&A Outlook 2009 posts
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