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The capital market environment has substantially improved, but<br />
continues to provide challenges for investors<br />
Current situation<br />
> The rules of the game remain unchanged for now: low loan<br />
availability and volatile markets limit acquisition opportunities and exit<br />
channels<br />
> The shift from loans to bonds in debt capital markets continues, but is<br />
buoyed by concerns about the sustainability of economic recovery<br />
> Margins have recovered despite sovereign debt woes. Due to low<br />
base rates, overall loan and bond pricing is below bull market levels<br />
> Leverage levels of around 3.5-4.0x EBITDA are driving up the<br />
required equity commitments in transactions<br />
> Despite successful PE-backed IPOs in 2010, the potential for IPOs as<br />
an exit channel is limited<br />
Development in<br />
<strong>2011</strong> depends<br />
heavily on the<br />
sustainability of<br />
economic<br />
recovery<br />
<strong>European</strong> <strong>Private</strong> <strong>Equity</strong> <strong>Outlook</strong> <strong>2011</strong>_Final_010411.PPTX 19
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