Wall Street Journal: Survey Says: More Exercise, Less Oil and Gas for PE Next Year

By  HILLARY CANADA, Dec. 3, 2014

Private equity deal makers may have had their fill of Texas tea.

Just 20% of 117 senior level private equity professionals polled in mid-November by trade group Private Equity Growth Capital Council said they see oil and gas as the sector which will provide the best investment opportunities over the next 12 months.

That is down from June, when 34% of 119 polled professionals identified the sector as a money-making proposition.

Instead, deal makers are looking to technology deals for premium returns. Vista Equity Partners’ $4.3 billion bid for Tibco Software Inc. ranked as one of the largest take-private deals of the year, followed closely behind by multibillion dollar offers for Riverbed Technology RVBD -0.05% and Compuware Corp.

While they may not be optimistic about the opportunities ahead in oil and gas, private equity pros have a pretty glass-half-full attitude about the economy.

More than 70% said they anticipated the S&P 500 would be at the same level or higher by late April. Three-quarters of respondents said they thought the economy was generally headed in the right direction, up from 54% in June.

However, a substantial percentage were concerned that financial conditions in Europe, heightened volatility, and rising interest rates could hurt the U.S. economy in the next year.

Despite lingering concerns about the external threats to the U.S. economy, more than half of those polled said competition for deals increased compared to the first half of the year.

That increased competition could explain why so many of the polled deal makers–21%, according to the survey–are making a New Year’s resolution to exercise more. We assume it is either for stress relief or because the later rounds of bidding are starting to strongly resemble “The Hunger Games.”