Capital overhang - Love your leftovers

With buyout investment levels recording a substantial drop in the last 12 months, while fundraising (at least in the first half of the year) remained at historical highs, there are currently large quantities of dry powder left over in the market.

For many this will be a major concern, since ongoing illiquidity in the debt markets means putting this capital to work is expected to remain difficult in the year ahead. However, some are suggesting that the overhang may be beneficial to GPs, as it will extend the timeframe before they need to come to market again.

A recent study produced by the Boston Consulting Group, for example, suggested that those firms that need to come to market in the next two to three years will struggle to raise and could be amongst the worst affected by an anticipated "shake-up" in the industry.

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