Have your say: Industry positive on 2011 dealflow

John Bakie
21 January 2011

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Readers of unquoteт are positive about the outlook for this year, but remain concerned about the future, according to our end of year survey.

Almost 50 readers of unquote.com gave us their views on the market in 2010 and their expectations for the future. Though 2010 was seen as a major recovery in comparison to a very difficult 2009, the market was far from healthy, and unquote" readers expect continuing challenges in the year ahead.

A huge 67% of unquote.com readers believe dealflow will increase in 2011, and just 4% expect it to fall, a positive sign for the industry. While dealflow in 2010 was considered to be in-line with or even above expectations, there were concerns over the extent to which these became successful deals. When asked about dealflow, no respondents felt dealflow in 2010 was significantly below their expectations, but when asked about completions, 7.4% said these were significantly below what they expected.

Leverage conditions could play a part in this. While almost 56% of respondents said leverage was easier to obtain, 7.4% felt it was more difficult to secure debt for transactions in 2010 compared with 2009. Over the past 12 months, many market commentators have stated that leverage conditions have improved, but major packages can still only be achieved for the very best assets with reliable cashflow. Those looking to buy more risky assets may still have found the bank doors closed to them, making it difficult to complete investments despite good dealflow.

Other concerns included pricing, which has been a contentious issue throughout 2010. Many market players have told unquote" that asking prices were much higher than they had hoped given the uncertain economic situation. Almost 50% of respondents said pricing in 2010 was higher than it had been in 2009. Furthermore, 50% of respondents say they are worried that Europe is at risk of a double dip recession, while just 19% said a secondary economic dip was not a concern. Clearly private equity players are mindful that the economic crisis following the failure of the banking system is not yet over.

Overall, market players believe 2010 was a better year, and expect 2011 to see continued improvement. Early signs suggest deal activity has maintained momentum since the beginning of the year, and unquote" will continue to monitor the latest trends.