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It's not just corporate insiders of publicly traded companies who are dumping stocks at a feverish pace: private equity also would be... if of course the equity wasn't "private." Stephen Schwarzman, the CEO of Blackstone - the world's largest private equity firm - warned Monday that the inflating bubble in asset values "could lead to a painful reckoning, particularly for late-stage investors in private technology companies like WeWork parent We Co."
Speaking to the WSJ, Schwarzman said that orivate valuations are getting "very high", adding that later-stage funding rounds in companies planning initial public offerings were helping to escalate those values, even for companies that often have little prospect of profitability. Case in point: WeWork, whose disastrous IPO, and whose valuation collapse from $47 billion to less than $10 billion, coupled with mass layoffs, demonstrates what happens when there are no more greater fool.
Risk - Schwarzman - Response - Question - Patterns
"That's the greatest risk," Schwarzman said in response to a question about patterns he sees developing in the market. "These valuations of private tech companies are most probably too high," he said, adding some people will lose money as a result.
Schwarzman listed SoftBank's catastrophic investments We and Uber Technologies as examples of overly high valuations, and likened the situation to the dot-com bubble around the turn of the century.
Blood - VCs - Investments - PE - Firms
Then again, the bad blood between VCs cashing out from overvalued investments, and PE firms trying to buy (or sell) companies at a time of record high EBITDA multiples is hardly new.
Alternatively, VCs will be happy to counter that whereas their investment create jobs, PE portfolio names merely saddle firms with massive debt loads, forcing them to fire millions of workers...
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