Equity Overhang

private-equity-overhangThe challenge for new and growing businesses (medtech or otherwise) in today’s economy is finding the financial means to continue to develop and realize the potential of their ideas. Funding opportunties are limited with credit tight.
However, the picture is not as dark as it appears on first glimpse, and there is reason to believe that funding — at least in terms of equity investment — is only momentarily stalled. The funds are there, but the purse-string holders are simply waiting for the right opportunity (literally) to invest in. A recent report by the Alliance of Merger and Acquisition Advisors and research firm Pitchbook Data (see link) indicated that there is currently a $400 billion "overhang" in equity financing; that much more has beeen raised than has been actually invested. Moreover, this overhang stands at an all time high.
While the uncertain economy might, for a little longer, still discourage equity investors from taking risks, the interest in equity- quality returns will sooner or later overcome that caution. The above report suggests that by fall, that point will have been reached, if not sooner.

Posted via email from medmarket’s posterous

Leave a Reply