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Speaking at Jordan Edmiston Group Inc.'s Growth Conference at the Four
Seasons hotel in New York on Thursday, Jeffrey Stevenson, managing partner and co-chief executive officer of media buyout firm Veronis
Suhler Stevenson, said, "Three is the new six." Stevenson was referring
to the leverage multiples on private equity buyouts, as already-taut
credit markets cinched even tighter in recent months.
"Three doesn't even exist," he added. Insight Venture Partners managing director Deven Parekh agreed and said leverage multiples are at 2 to 2.5, versus 4 or higher just half a year ago. Philip Siegel, general partner at Austin Ventures, said, "Three is about the edge" of what is available. Though LBOs may require greater equity investments today, the idea is to lever up once the debt market eventually loosens. For all of the pain, private equity firms that can pull off acquisitions might look back at 2008 and 2009, with their cheap valuations, as signature vintages for buyouts. When they recall this year and next, Siegel suggested, investors may well think, "We went through hell, but made a lot of money." That compares to 2007, which he quipped was a case of, "We had a lot of fun, but we lost our shirts." - Chris Nolter CategoriesPrivate capital video
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