Why those private equity guys may want to go public sooner rather than later

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I missed the breakingviews.com scoop last week on Carlyle Group co-founder Bill Conway warning his colleagues that private equity’s salad days are coming to an end. It’s very interesting:

In a recent memo to Carlyle’s investment professionals obtained by breakingviews.com, Conway acknowledges the firm’s “fabulous profits are not solely a function of our investment genius, but have resulted in large part from a great market and the availability of enormous amounts of cheap debt.”

That “great market,” in which private equity firms can borrow all they want at low rates to buy companies, yet still get a good price when it comes time to sell one of their holdings onto public markets, will end in the next year or so, Conway predicts. After that, returns will be lower, and firms that didn’t keep a close eye on risk will be punished.

So yeah, I guess I can understand why Schwarzman & Co. might be in a rush to sell some of their shares to the public.

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