Down in Florida the private equity bigwigs are holding a conference--they're calling it "Super Return 2008"--fittingly taking place in the Blackstone owned Boca Raton Resort & Club. (You remember it as the place where Blackstone founder Steve Schwartzman offended everything Japanese.) Josh Harris, one of the founders of the Apollo Group, let loose with a rather dire prediction about the state of the economy.
Here's the dispatch from Peter Lattman:
"We don't think we've seen the bottom," he said, citing record-low consumer confidence, plummeting housing prices, a broken financial sector and an oil-price shock that has yet to work its way through the system. He said we should all brace ourselves for a nosedive in the economy and a broad-based distressed environment.
SuperReturn 2008: "We Should All Brace Ourselves for a Nosedive" [Deal Journal]
Posted by diablo , Jun 04, 2008 4:06PM
Of all the folks in the financial industry the PE guys are quite eager to talk down the economy more than the rest. Is this the way for them to lower the expectations so their investors don't give them so much grief?
Posted by guest , Jun 04, 2008 4:20PM
re 406. maybe.
but something will have to take the place of a home-equity-driven boom in order for this not to be at least partially true.
being very conservative with my words. maybe "miracle" would have been a better term.
Posted by Pro_Forma , Jun 04, 2008 6:32PM
@ Diablo
Putting on my conspiracy hat, I'd say this kind of rhetoric has nothing to do with alleviating LP concerns and everything to do with coercing potential targets into doing deals at lower multiples.
Posted by guest , Jun 04, 2008 7:31PM
wall street is crumbling and this guy puts a conspiracy hat on
Posted by guest , Jun 04, 2008 7:44PM
Down the tubes. For the next 18-24 months. Anyone want to rebut?
TOGFD
Posted by guest , Jun 04, 2008 8:29PM
@ 7:31
Great insight and nice use of sensationalism. Do you work for CNN by chance?
Posted by guest , Jun 05, 2008 12:06PM
I'd guess it's more about setting expectations with LPs that they will be doing fewer deals in the next 6-18 months.