About two out of three private equity firms - 63% -- see other p.e. peers, and not corporate buyers, as their biggest competitors for the best pickins, according to a Marsh and McLennan, Mercer Human Resources and Kroll survey. Only 20% of respondents viewed strategic buyers as their main rivals. As a result of the competition, says the consultancy, private equity firms are moving into riskier business in an effort to produce the returns that attracted investors to them in the first place. “Competition for lucrative deals is acute, forcing many firms to work harder to stay ahead of their peers and to consider diversifying into new sectors and geographical markets,” Marsh’s Edwin Charnaud told Dow Jones Newswires. “The risks associated with maintaining historic returns are therefore more pronounced.” The survey also found that unreasonable price expectations was a major obstacle to completing a deal, followed by securing debt (34%) and political/economic factors (18%). More than 80% of those polled said the top reason for ending a bid was little confidence in the target’s existing management. Four out of 10 surveyed say they have used price adjustment as a way of protecting against the risk of underfunded pension schemes, while more than 20% rely on indemnities and warranties.
