Tuesday, December 13, 2005

Around the world, around the world

'Dangerous' level of debt used to fund acquisitions

FEARS that the private equity bubble could burst heightened yesterday after 95 per cent of the industry’s key practitioners gave warning that the amount of debt being used to finance leveraged buyouts had reached “dangerous and unsustainable levels”.

The warning, contained in a Financial News survey, is the most stark signal yet that private equity firms have borrowed too heavily to finance acquisitions in the past 18 months. Jon Moulton, the founder of Alchemy Partners, said: “If there is any kind of a downward turn in the economy we will see a spectacular level of failure. The debt levels are without precedent.

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