Has Risk Management in Private Equity Kept Pace with Rapid Growth? (Special Issue)
Last Updated: 11/21/07
On This PageDecember, No. 245a
The Federal Reserve System's Private Equity Merchant Banking Knowledge Center, formed at the Chicago Fed in 2000 after the Gramm-Leach–Bliley Act was passed, sponsors an annual conference on new industry developments. This article summarizes the 2007 conference, Private Equity Has Gone Big … Has Risk Management Kept Pace?, held August 2 and August 3.
At the time of the conference, the private equity industry was facing a rapidly changing environment. Credit markets were becoming more restrictive and risk averse, turning away from the low interest rates and accommodative credit terms that had prevailed for several years and had facilitated rapid growth in private equity investing. Private equity firms were facing the prospect of fewer deals, higher borrowing costs, tighter terms and a reduced availability of leverage. They also risked losing their competitive edge compared with more-traditional, strategic buyers. A number of conference participants addressed these changes and their possible effects on private equity.
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