Gary McGaghey Private Equity Expert

The money market has experienced a significant tailwind characterized by all-time low interest rates, particularly in the private equity sector. The same period is expected to continue up to 2021 for private equity firms. Private equity firms get projected to experience an increased deal volume of approximately 21 percent for the first initial five months of 2021. The growth is an increase in deal volume compared to the same market for the period last year. A total of 2346 deals are projected to get completed by the end of next year if the situation remains optimistic as it is currently.
The low-interest rates in the market have triggered the historical market tailwinds, and private firms are benefiting from this situation. Consequently, the rise in fundraising in the private equity market has also started the growth experienced in the market. It’s over a decade since fundraising became a significant boost and factor in the private equity market. Last year, fundraising contributed about $150 billion to the kitty, making it a record high. Consequently, the same period was characterized by experienced professional investors running some of the United States’ established funds contributing vast sums of capital into the industry. The new funds introduced into the market resulted in high levels of availability to deployable funds.
The emerging private equity firms have increased competition with the traditional forms that have controlled the market for decades. The results are increased pressure on returns and the devising of new methods of asset management. Private equities, for instance, have diversified their asset management portfolio, and they can now hold multiple assets in various classes. Due to alternative and diverse methods of operations on these two private equity firms, there was an exciting scenario experience between 2015 to 2019 where private equity firms experienced a rise in new money while traditional forms faced constraint cash flows.