Private equity firms will be able to snap up businesses cheaper in 2016 due to jitters over the health of the global economy, according to Carlyle Group 's co-founder David Rubenstein.
“You are going to see much more money invested [by private equity] because lower multiples will be prevalent,” he said. “There’s a recession every seven years and we haven’t gone more than nine years without a recession. The last recession ended July 2009, so [in] June 2016 some people say something bad is coming along.”
Private equity firms have been complaining about high valuations for businesses and how this has depressed private equity investment levels for the past two years.
Rubenstein stayed away from predicting a recession but the more distressed an economic sector the greater chance for private equity underwriters to bottom fish. Carlyle's co-founders have a fresh $300 million between them to lure trophy firms.