Fall 2016 issue of Horizons

PRIVATE EQUITY

Fundraising At the June meeting of the Federal Open Market Committee, members

In Short In light of abundant capital, a competitive deal scene and uncertainty about economic trends, private equity firms have proactively begun to modify their investment strategies. Through middle market add-on investing and themed investment strategies, firms continue to enjoy present success while preparing themselves for the future. The tech industry has become a highly attractive market to private equity firms, dashing gloomy early- year predictions. In the current low interest rate climate, an extremely high percentage of funds are reaching their fundraising targets as the private equity world adapts and thrives. Mergers and acquisitions are expected to remain very active for the rest of 2016 and into the foreseeable future, barring a significant economic event. Multiples are expected to remain relatively high and the market will likely continue to favor sellers.

“agreed to leave the target range for the federal funds rate unchanged at one quarter to one half percent.” While borrowing rates remain low, private equity firms continue to find success fundraising. In the first half of the year, investors closed a record-setting 54.0% of funds at levels above their fundraising goal. Furthermore, only 21.0% of funds fell short of their goals in the first half of 2016 – down 7 percentage points relative to the first half of 2015. Second quarter capital raised by private equity firms topped 2015’s corresponding time frame by nearly $30 billion to bring median fund size up to just over $322 million. In addition, the amount of dry powder – unallocated capital available to fund managers – has risen to $818 billion, up from the 2015 ending balance of $745 billion.

RubinBrown’s Private Equity Services Group RubinBrown offers private equity firms and their portfolio companies an integrated suite of business services aligned across the entire private equity life cycle.

Ben Barnes, CPA, CGMA Partner-In-Charge Private Equity Services Group 314.678.3531 ben.barnes@rubinbrown.com

Jeff Sackman, CPA, CGMA Partner & Vice Chair Private Equity Services Group 314.290.3406 jeff.sackman@rubinbrown.com

page 16 | horizons Fall 2016