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Trump Effect Falls Short on Middle-Market PE Capital Raising, Survey Finds

July 26, 2017, 08:00 AM
Filed Under: Economic Commentary

Optimism over the Trump Administration's ability to positively impact private equity's ability to raise new capital has fizzled since the President's inauguration, a new poll finds.

According to ACG New York's Mid-Year Middle-Market Survey, 52 percent of those polled believe that the Trump administration policy has had no effect on middle-market private equity's ability to raise capital. 

Nearly half of respondents believe that middle-market M&A activity will strengthen during the second half of 2017 compared to the first half of the year, and 45 percent believe it will keep pace with the first half. However, compared to the heady days leading up to Trump's inauguration, optimism has been tempered. Compared to 79 percent of survey participants at the end of 2016 who believed the Trump Administration would have a positive impact on private equity's ability to raise new capital, as of mid-year 2017, nearly 37 percent believe the administration will have a positive effect, with 52 percent indicating that the new administration will have no effect at all.

"This year's mid-year ACG New York member survey comes at a particularly interesting time for the middle-market; we are crossing the halfway point of the first year of a new presidential administration and the economy is holding steady with the Dow well above 20,000 and the unemployment rate at one of its lowest levels," said David Hellier, President, ACG New York. "ACG members have consistently demonstrated the ability to provide useful insights into the future of the middle-market M&A environment.  Of particular interest, this year's survey found that 61 percent of participants indicate the economy in 2017 thus far is in line with their expectations, as they had predicted during our 2016 year-end survey - which demonstrates that our members have their fingers on the pulse of middle market M&A trends."

Respondents remain optimistic on the overall state of the economy, with nearly 36 percent responding that the economy has been stronger than expected this year and almost 61 percent believe that it will perform in line with already strong expectations. Beyond the revised expectations on M&A activity and the sanguine outlook on the economy, 75 percent of survey participants believe returns on private equity investment will outperform those on hedge funds and venture capital during the second half of 2017.

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