Shortly after the writing of this book's first edition, the U.S. economy was shaken by a catastrophic economic crisis, the likes of which had not been seen since the Hoover administration. A multitude of factors combined to cause falling stock markets, rising unemployment, and a general angst among the American public, who watched as once-iconic firms faded into history. Lehman Brothers and Bear Stearns were dissolved. Merrill Lynch sold itself to Bank of America for roughly one half of its prior year value. AIG sought billions from the federal government to preserve solvency. Industrial icons General Motors and Chrysler filed for bankruptcy. America's disease soon evolved into a worldwide pandemic, crippling economies that, three years later, are still attempting to regain their footing.
While the American economy was fighting the Great Recession, the Private Equity (PE) landscape was facing its own battle. Returns of PE portfolio companies, including buyout and venture-backed businesses, plummeted as harvest environments became challenging. Many PE investors faced liquidity issues and found themselves over-allocated in alternative investments as the value of their public securities degraded faster than illiquid assets. Investors subsequently moved to reduce PE investments, resulting in some of the leanest fundraising levels seen in recent times.
At the time of this writing, the U.S. economy appears to be on the mend, though European debt default worries continue to make ...