Monday, May 16, 2005

Go back home!

The last few years of a slow domestic economy forced many US private equity groups to look abroad and do large deals in Germany, South Korea and Japan. That is about to change and reverse course again.

Shocked by some of the hardball tactics (and the eye-popping profits) of these private equity firms (and hedge funds) to squeeze value out of their targets, South Korea has already announced rules that will result in domestic firms being given preference in bidding wars.

In Germany, politicians have some nasty words for these firms. Though no new restrictions have been placed on their operations, the environment is definitely turning hostile.

China also has made repatriating profits harder with some recent regulations.

Will all this mean that the firms will change plans and do more deals back home ?

Already there are indications, as reported by Wall Street Journal today, that India, Brazil etc are emerging as alternate destinations. But the volumes in these countries won't make up for lost business elsewhere.


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