Private Equity Shakeout: 'There Will Be Some Carnage'

Smaller firms may disappear as poor returns hinder fundraising
A sign advertises HJ Heinz Co. ketchup at the top of the Heinz History Center in Pittsburgh Photograph by Kevin Lorenzi/Bloomberg

Private equity firms are bankrolling the biggest deals announced this year: Silver Lake helped finance the $24.4 billion buyout of Dell, and 3G Capital teamed up with Warren Buffett’s Berkshire Hathaway on the $23 billion takeover of H.J. Heinz. Yet the dealmaking revival comes too late to resuscitate many buyout shops that have losing records. “There will be some carnage,” says Jay Fewel, a senior investment officer for the $73.5 billion Oregon state pension fund, which has been investing in private equity for more than 30 years. “A lot of folks raised money in the mid-2000s, when it was pretty easy. Now there are probably too many funds out there.”

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