Analysis

Private Equity Confidence Survey Central Europe

Defying gravity

The Private Equity Confidence Survey has been tracking the changing sentiments of the Central European investment community every six months since 2003. Deloitte Central Europe proudly presents the latest report which marks the 37th edition of the programme.

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Defying gravity

Experience, proven growth strategies and improving economies are propelling confidence amongst private equity deal doers, according to the latest Deloitte Central Europe Private Equity Confidence Survey.

Central European Private Equity Index: Key findings

  • The Index continues its climb to its 2007 and 2011 peaks, with respondents optimistic about the economy, market activity and leverage availability – though also mindful of heightened pricing. While the proportion of deal-doers expecting the economy to improve has nearly doubled to 70% since our winter Survey, 41% of respondents feel it is more expensive to acquire businesses now than six months ago, a four-fold increase on six months ago. For the first time in two years, no respondents feel prices have come down. Looking ahead, over two-fifths of deal-doers (41%) expect pricing to continue its climb.
  • This is impacting plans to buy and sell, with experienced deal-doers seemingly adopting a more cautious approach to buying as the pricing creates a strong divestment backdrop: The proportion of those expecting to sell more than they buy over the coming months has tripled from 6% in the winter to 19% now. At the same time, those expecting to buy more has dropped from 72% to 57%.
  • Deals that take place now will continue to be supported by liquid leverage markets. A third of respondents (33%) expect the availability of debt finance to increase over the coming months, up from just 13% in our last Survey and the highest level in six years.
  • Our latest Survey shows that the revival of confidence continues, maintaining the incredible uptick seen since the winter and – which saw our largest survey-on-survey climb – as the Index hovers very closely to the peaks seen in 2007 and 2011, landing at a very impressive 149.
  • A number of indicators in our latest Survey attest to the continued confidence, namely ongoing optimism around the economy, with a staggering 70% expecting an improvement in the economic backdrop, nearly double our last Survey. Furthermore, 98% of respondents expect market activity to increase (61%) or stay the same (37%), up from 83% last time. One important finding is expectation of high prices continuing or even climbing further, as a wall of capital and growing business agility fuels vendors’ expectations of what prices they can command now and going forward.

Private Equity Confidence Survey

Download the report to find out more (PDF)

We are encouraged though unsurprised by this very positive sentiment. Deal-doers in the region have built up resilience and experience they can draw on for supporting management teams. Funding options remain plentiful, and growth levers such as M&A have become a proven strategy for accelerating growth in companies backed by private equity.

- says Mark Jung, Deloitte Partner and Private Equity Leader.

 

The region is now one of experienced deal-doers driving meaningful value in the businesses they back. A high pricing environment may be incentivizing divestments despite attractive buy-side opportunities in the market.

- adds Mark Jung.

Read the press release.

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Index nears peak as confidence soars

Experience, proven growth strategies and improving economies are propelling confidence amongst private equity deal doers, according to the latest Deloitte Central Europe Private Equity Confidence Survey.