Private equity in the automotive supplier industry

What fate awaits suppliers owned by PE firms?

The last ten years have seen a dramatic rise and fall in private equity worldwide. PE firms have performed really well from 2003 to 2007 amid favourable business environment. The growth was primarily driven by the availability of inexpensive debt, rising profitability across all industries, growing asset prices and the allocation of significant assets from institutional investors to private equity funds. The automotive industry has been one of several beneficiaries of this phenomenal growth of PE firms.Several automakers, dealers and suppliers that were once on the brink of collapse received timely funding from these PE investors. Suppliers in particular were popular among these investors, as the required investments were generally smaller in size, needed only a short locking period and had more value attached to them.