Bain and Company Global Private Equity Report 2012

Dynamics for 2012 and beyond.

The global PE industry edged into the new year trailing heavy baggage from 2011 and surrounded by a dense fog of potentially destabilizing uncertainties. The US economy remains weak, hobbled by stagnant household incomes, anemic spending by over leveraged consumers, fi scal policy gridlock heading into an election year and hesitancy on the part of businesses to invest until the growth outlook clears. In the euro zone, policy makers have managed to improvise patchwork solutions that have held the currency union together, but the risk is real that a misstep could cause the fragile stability to unravel, with potentially catastrophic consequences for the banking sector and the global economy. Emerging markets and other major economies face uncertain prospects in 2012. China, an engine of global expansion throughout the downturn and since, is early in what could prove to be an unsettling transition as the economy, built around export growth, adjusts to reduced global demand for its goods and services. Meanwhile, natural resources-rich Brazil, Australia and Canada will ride the waves of volatility emanating from the US, Europe and China that consume their energy, minerals and other primary inputs. In short, PE investors will need to navigate a sea of global macroeconomic and geopolitical worries in a year characterized by choppy equity markets and nervous debt markets that could be capsized by any number of policy miscalculations or exogenous shocks.



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