Our Insights

May 2014

The Global Overhang (According to Goldilocks): Too Much, Too Little, or Just Right

Andrea Auerbach, Caryn Slotsky

  • Today’s estimated global overhang is $909 billion net of fees, with US private equity, European private equity, and real estate the primary contributors.
  • With capital appearing to be deployed at a slower pace than historically, the overhang is larger than expected. Too much overhang and the pressure to put capital to work before it expires could amplify competition and place upward pressure on transaction values, impacting returns.
  • Investors may do well to stay alert, note current market conditions, review their commitment programs against those conditions, and set a course for steadily building their program while avoiding the market swells.
  • A program prepared for market volatility may create openings for selectively establishing quality manager relationships for long-term portfolio benefit.