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Bailey McCann, Opalesque New York:

2019 was another banner year for private equity, according to the latest Global Private Equity Report from Bain & Company. While there were some signs of a slowdown compared to 2018, the deal environment was generally competitive. However, 2020 might prove to be the year that the slowdown starts to feature more prominently as GPs position their portfolios defensively.

57% of private equity fund general partners (GPs) surveyed by Preqin worldwide think the economy has reached a cyclical peak, while 14% think it has already entered a recession. In Bain's report, GPs expressed concern about overheated valuations and growing debt levels. According to data in the report, roughly 40% of PE funds have altered their investment strategies, with some assessing recession risks more carefully during due diligence. Others are building more balanced portfolios to emphasize countercyclicality, and most are either accelerating exits or getting more wary of overpaying.

GPs are also sitting on significant amounts of dry powder, making deals more competitive and while valuations creep ever higher. The average multiple of enterprise value (EV) to EBITDA for a leveraged buyout (LBO) reached 11.5x in the US and 10.9x in Europe. Over 55% of US buyout deals in 2019 had an EV/EBITDA purchase price multiple above 11x. Multiples rose across all sectors. Technology companies co......................

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