During the boom years, private equity investors capitalised on unprecedented liquidity in the leveraged loans market and the application of innovative management techniques to achieve high rates of return. After the uncertainty of the financial crisis which saw activity fall to levels last seen in the mid-1990s, we have seen some signs of recovery over the last 12 months and reports indicate that both the value and volume of European buyouts are starting to increase. The question is whether this apparent recovery is sustainable in the face of continuing economic uncertainty and constraints on capital.

Historically, the period immediately following a downturn has been a time for increased activity. After a couple of quieter years, many private equity investors need to achieve exits to demonstrate returns in the context of new fundraising activity and there is a build-up of ‘dry powder’ – committed equity that needs to be invested. 2010 saw the initial public offering markets start to reopen for larger assets with a sustainable long-term equity story.