On Friday I asked email readers how the market tumult will affect the private equity and venture capital. There wasn’t much variation, so here it is:
New PE deals: Virtually at a standstill, particularly for publicly-traded companies. Where do you base the premiums? On Friday 7/29 marks or Friday 8/5 marks? And how do you judge the likelihood of shareholder approval? There also are concerns about a new credit crunch, which could make it very difficult to complete deals that today are in their formative stages.
New VC deals: Pretty much status quo for now, but that could change quickly depending on the fate of the dozen companies scheduled to price IPOs this week. If none of the companies – or only a couple – make it out, then VCs might begin conserving cash for fear of additional fund-raising difficulties (based on “no distributions=no new LP commitments” equation).
A consensus closure of the IPO window also could tamp down massive valuations being paid for consumer-facing tech companies, as could continued deterioration of certain public company stocks like LinkedIn (which reported great numbers on Thursday, but got slammed anyway).