We knew that the private equity industry was taking it on the chin harder than just about anyone else, still the numbers from a new Boston Consulting Group study are mindblowing, in terms of how bad things are expected to get:
Deal Journal: The consultants expect 50% of all companies backed by private-equity funds to default on their debt; as many as 40% of buyout firms to shutter their own operations and only around 30% of partnerships to survive intact through the next few years; $1 trillion of losses from any PE shakeout; and that the few PE portfolio companies that are sold will go for fire-sale prices.
Thomson Reuters data show that the number of bankruptcy filings by pending or current financial sponsor-backed companies to date is accelerating. In September, 15 private-equity-backed companies filed for bankruptcy. That was followed by 23 filings in October, 27 in November and 28 this month.
Even though private equity was only guilty of the same sin as anyone else — taking on too much risk and leverage during the boom times — we have a hard time imagining Washington being very forthcoming with bailout money.