In the boom years of 2006 and 2007, European and North American private equity firms acquired significantly larger businesses, financing the deals with record levels of debt. The borrowings often consisted of four- and five-year term loans. When the credit freeze followed the banking crisis in 2008, many predicted a flood of defaults when the “wall of maturity” arrived in 2011 and 2012. Fast-forward to today and it appears as if the industry has sidestepped a crisis. Most PE firms proactively addressed the problem by paying down debt, renegotiating terms, or turning to the high-yield bond market and other sources to refinance, extending debt maturity dates by several years. But that begs a new question: How will the industry fare if economic and sovereign debt problems in Europe and the United States drag on?
Citing Knowledge@Wharton
For Personal use:
Please use the following citations to quote for personal use:MLA
"Private Equity Buys Time with Major Refinancings."
Knowledge@Wharton. The Wharton School, University of Pennsylvania,
24 April, 2012. Web. 27 January, 2021 <https://knowledge.wharton.upenn.edu/article/ernst-young-private-equity-buys-time-with-major-refinancings/>
APA
Private Equity Buys Time with Major Refinancings.
Knowledge@Wharton
(2012, April 24).
Retrieved from https://knowledge.wharton.upenn.edu/article/ernst-young-private-equity-buys-time-with-major-refinancings/
Chicago
"Private Equity Buys Time with Major Refinancings"
Knowledge@Wharton, April 24, 2012,
accessed January 27, 2021.
https://knowledge.wharton.upenn.edu/article/ernst-young-private-equity-buys-time-with-major-refinancings/
For Educational/Business use:
Please contact us for repurposing articles, podcasts, or videos using our content licensing contact form.Additional Reading
-
Finance
Will Biden’s $1.9 Trillion Stimulus Plan Work?
President-elect Joe Biden’s proposed stimulus package is comprehensive and will likely help to move the economy forward, but direct payments could be better targeted to those in need, say Wharton experts.
-
Innovation
How Institutional Reforms Can Power Startups
Venture accelerators see higher numbers of quality startups in countries that lower entry, growth and exit barriers, according to new research by Wharton’s Valentina Assenova.
-
Sponsored Content
Ziroom: Winning in China’s Housing Rental Services Market
The housing rentals market is projected to be a major growth engine in China’s real estate sector over the next 10 years. Ziroom is the leader in apartment rental services.
Join The Discussion
No Comments So Far