Global private equity leaders believe the credit crunch will lead to a transformation of the industry, according to research by Celerant Consulting.

Global private equity leaders believe the credit crunch will lead to a transformation of the industry, according to research by Celerant Consulting.

The study, involving 222 senior private equity executives from across Europe and the UK, revealed that 96 per cent of respondents believed that the industry would face changes in light of tighter credit lines, although 16 per cent of those questioned admitted that they did not know what form this transformation would take.

Twenty per cent of participants indicated the need for a completely different financing model, while 19 per cent predicted consolidation in the market and 16 per cent said they did not know what would happen.

The survey was carried out between September and October by Celerant’s Economist Intelligence Unit, and revealed that private equity players were willing to focus on different types of areas.

A total of 44 per cent of executives questioned were prepared to consider deals outside of their normal sectors, whilst 42 per cent were prepared to do deals outside of their normal size range.

However, 66 per cent claimed that they were not planning on investing at present and are prepared to wait for more attractive deals – an outcome partially explained by the discovery that 53 per cent believe the market will have fully recovered by the first half of 2010.

David Axon, head of private equity and M&A at Celerant commented: “The private equity industry finds itself at a critical junction. What has been evident in recent months is that there has been a significant shift from investment and financial re-engineering to focusing on the operational performance of companies within their existing portfolios.”