On This PageNovember, No. 256a

The Federal Reserve System’s Private Equity Merchant Banking Knowledge Center, formed at the Chicago Fed in 2000 shortly after the passage of the Gramm–Leach–Bliley Act, sponsors an annual conference on new industry developments. This article summarizes the 2008 conference held on July 9-10.

Navigating the New World of Private Equity—A Conference Summary
Last Updated: 10/22/08
The recent financial turmoil has dramatically altered the landscape for private equity, particularly in the buyout sector. The diminished outlook for corporate profitability has altered projected returns and payback periods for investments in both the public and private domains. Leverage is less available and less attractive as a financing source for transactions. Financial institutions have reacted to stress on their balance sheets by tightening terms, raising prices and reducing the availability of credit. Despite these challenges, the faltering economy and the perception that investors may have overreacted to it have broadened the pool of opportunities for private equity firms. Newer opportunities include investing in financial institutions and clean technology and buying distressed loans and securities. In this way, private equity firms have contributed to restoring markets and economic activity to normality.