Private equity in more robust position than before crisis

Author: Olly Jackson | Published: 29 Mar 2018

Is the private equity market better placed than it was before the financial crisis? Some say it is, with reduced debt levels and an overall greater awareness of risk.

In December 2008 what would have been the world’s largest ever leveraged buyout collapsed. Auditor KPMG was unable to declare that Canadian communications company BCE would meet solvency tests after its planned privatisation. A consortium led by the Ontario Teachers’ Pension Plan pulled out, one year after they announced their intent to purchase all of BCE's shares for about $50 billion. The consortium would have borrowed $15.9 billion to finance the deal.

In spite of BCE’s share price skyrocketing since – it has paid $3.9 billion in dividends and a further $1.4 billion repurchasing shares – other private equity firms would have been wise to exercise more caution in this period famously named private equity’s 'golden age’. KKR, Bain Capital and Vornado Realty...