Investment Banks, Hedge Funds, and Private Equity, 2nd Edition

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Private Equity Issues and Opportunities

From 2002 through 2007, a benign interest rate environment, combined with low default rates and ample credit, enabled private equity funds to grow dramatically. Assets under management increased by more than ten times and individual transaction values increased to more than $40 billion. This remarkable period came to an abrupt halt during the second half of 2007, as the world entered the worst credit crisis in more than 75 years. Many of the private equity deals that closed during 2005–2007 became big disappointments, with equity values dropping on some of these investments to 50 cents on the dollar, and lower. During 2008 and 2009, bankruptcy courts became busy focusing on private equity portfolio company ...