According to the Director of Research for PitchBook, the inventory of U.S. based, PE-backed companies has ballooned from 415 companies in 2000 to the current level of 6,238.Basically all of these companies are for sale, looking to grow or in need of some help.
In addition PitchBook’s recently published their Overhang and Fund Cashflow Report showing that PE firms still had more than $430 billion from older vintage funds that they need to invest quickly or risk having to return the money to their investors. Corporations also have large capital reserves on their books today and are primed to go on a buying spree.
However, a couple of days ago, the Wall Street Journal reported that the weak global economy dealing with the European crisis over the euro, flat growth and a slowdown in emerging markets has greatly slowed the pace of U.S. merger and acquisition activity for both private equity and corporate deals.Ernst and Young agreed by saying “activity is not expected to improve until there is more clarity on the economy.”In Ernst and Young’s report, total deals were down 15% over the same period last year while deal value plunged 43%.
More private equity firms and corporations are tweaking their operations and evaluating divestments in an effort to spur growth.As they do this, we are seeing a surge in their use of executive level temps called “interim executives.” These companies are using interim executive’s deep, specialized experience to test new initiatives, look at their processes for immediate savings to the bottom line, bring outside perspective and to stimulate growth in a much faster timeframe and with less risk than if they hired a permanent employee.Knowing how best to leverage this lower-risk, flexible and faster talent model can be a source of competitive advantage in today’s economic uncertainty.