In the context of financial crisis, access to banking loans is becoming difficult. Private equity funds are among the few available financing alternatives left for Romanian entrepreneurs who are starting to face an economic downturn. But according to surveys conducted by experts, Romanian entrepreneurs show reluctance in accepting an investor in their own company or business.
Prior to the financial crisis, the fact that local entrepreneurs were expecting high prices was the main reason keeping funds back from becoming stakeholders in Romanian companies. Within six months, however, the financing needs of Romanian entrepreneurs will become acute, fund heads estimate.
Most of private equity funds were invested in 2008 in constructions, but this is one of the fields, hard-hit by the crisis. Private equity funds made during hardest times of recession in USA in 1991 benefited by annual return of 80% in the following 5 years. So, for Romanians it could be a suitable context for investing before the economy revives, when trust and price are at minimum levels. Fields most impacted by the crisis will also be the favorite targets of investment funds, namely financial services, construction, tourism, automotive, and durable goods retail. The most important fields that private equity funds invested in during the first semester of 2008 were biotechnology, FMCG (16%), real estate (14%) and constructions already mentioned (14%).
The financial crisis will make companies significantly cheaper, the private equity funds' representatives agree. This decline in price will be an opportunity to buy funds and a challenge for those seeking to exit. The private equity funds will bring expertise and try to improve operations.
Investors are now more pretentious and private equity funds focus more on portfolio management than on new investment opportunities. And, from their perspective, liquidity is becoming an important asset in a company. Internal control systems, reporting and...