How has the credit market turmoil affected private equity funds, which mostly do leveraged buyout-type deals?
Credit seems much tighter since banks are having a harder time selling loans in the marketplace. Brophy: The debt crisis has affected private equity and it has hit the megadeal part of the market first and hardest because they’re more public. They’re also more touchy and sensitive to market conditions. And so that’s caused some of the big funds to sort of come down market, into the middle market. The middle market, by and large, has stayed pretty strong. By middle market, we mean companies with $500 million to $1 billion in enterprise value. So as the bigger private equity funds go to the middle market, what happens to the funds that specialize in that? Brophy: If you look at the balance sheet of a private equity shop, you’re likely to find that they put more dollars per deal into acquisitions than the venture capital people do. They will do fewer deals with the same amount of money than the venture funds. Then a big private equity shop will begin to look like an investment banking fir
