Firms Ready to Write Larger Checks for Equity Investments: Huntington's Davies

The video discusses the high valuations in the private equity sector, noting that despite these valuations, there is little pushback from firms due to the abundance of 'dry powder' or available capital. The discussion highlights the role of credit markets and direct lenders in facilitating larger deals. Concerns are raised about potential market shifts if profits don't keep pace with valuations, especially in cyclical sectors. The video concludes with an optimistic outlook for middle market activity in 2020, expecting it to mirror 2019, with certain sectors like fintech and healthcare pushing the edge.

What is a significant factor driving private equity deals despite high valuations?

• Lack of investment opportunities

• Abundance of dry powder

• High borrowing rates

• Decreasing market competition

What could potentially trigger a shift in the current high valuation trend?

• Increased profits matching valuation pace

• A slowdown in cyclical sectors

• A decrease in sovereign wealth fund investments

• A rise in cash flow positive IPOs

Which sectors are investors likely to focus on to avoid cyclical risks?

• Automotive and retail

• Real estate and construction

• Food and beverage, and automotive aftermarket

• Technology and finance

What is the expected trend for middle market activity in 2020?

• A significant decline compared to 2019

• A similar pace to 2019

• A rapid increase in activity

• A complete halt in investments

Which sectors are expected to push the edge in valuations in 2020?

• Energy and utilities

• Retail and transportation

• Fintech and healthcare

• Real estate and construction