Eye of the storm

However, some deals are coming through, such as Litorina's exit from LGT, a rare occurrence, and a secondary buyout at that. The transaction appears to be a win-win. Litorina could reap a 10x money multiple, and buyer Axcel described the price as "balanced", suggesting EBITDA multiples were at more sensible levels than just a year ago. In contrast, Professor Tim Jenkinson, Oxford University's professor of finance, accurately describes highly leveraged secondary buyouts at the peak of the market as "investments from hell." Jenkinson explains this with the close (and unhealthy) correlation between leverage levels and pricing, where debt drove valuations through the roof (see page 12).

These days the opposite is happening: the lack of available financing is forcing prices down. But who would want to sell under these conditions if your business is relatively healthy? Surely, markets will pick up again soon, right? Analysts announce that "we have hit the bottom" every other day. But chances are it will get worse before it gets better. The full impact of the increased unemployment rates are unlikely to be felt just yet, with many companies in the region only recently having warned of lay-offs. On a recent visit to Oslo, I asked one GP if he thought we would see more bankruptcies in the region. The blunt answer was, "Yes. Guaranteed," and with a surprised look on his face, amazed that I could ask a question with such an obvious answer.

Surviving will be key, which is also the topic of the unquote" Private Equity Congress in Stockholm on 10 June. For more information visit www.nordicpecongress.com. I hope to meet you all there and hear your views on the challenges ahead.

Yours sincerely,

Rikke Lilla Eckhoff

Editor, Nordic unquote"

Tel: +44 20 7484 9824

rikke.lilla-eckhoff@incisivemedia.com.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Nordics