Oodles of private equity money is not enough to find worthy investment opportunities, so a growing number of p.e. firms are looking at the portfolio companies of other funds. Citing figures from the U.K. Centre for Management Buyout Research, Financial News says more than 50% of the 125-plus private equity deals in the first half of the year have been so-call secondary buyouts. "Given the high levels of private equity money chasing assets, as public to privates become increasingly difficult to achieve," says Mervyn Metcalf of Merrill Lynch in an FN interview, "there is arguably a premium being created for privately owned assets where there is a higher degree of certainty bidding will result in a transaction completing. As a matter of fact, some p.e. portfolio companies make it through several transactions, and the private equity purchasers are no worse off because of it. According to Ernst & Young, average returns were as good as the original. The accounting firm found that secondary buyouts of more than €200 million (US$255 million) returned 25%, compared with 26% for all p.e. transactions. That still doesn’t make investors whose money ultimately lands in a secondary buyout happy. "Passing investments from one fund to the next could be hairy," one investor told FN. "At a macro level this cannot be good. If you take things to the extreme, and all managers sell their investments on to their next fund, we could be close to a pyramid."