- Private-equity firms have an estimated $2.5 trillion in cash sitting on the sidelines.
- Once stock-market valuations settle, private-equity firms are expected to rush in and start buying.
- Here are some of the Wall Street bankers they will call when the buying spree starts.
Corporate valuations have taken a beating this year, especially tech company valuations. While that's bad news for some closely watched corners of Wall Street, including bankers who take companies public, it could lead to more business for other types of dealmakers.
Enter the "financial sponsor banker," Wall Street's quintessential relationship banker tasked with standing by private equity firms when they take companies public or bid on companies they want to take private.
Private equity firms currently have $2.5 trillions in cash waiting to be deployed, according to Morgan Stanley. And with valuations of even strong companies plunging, they are "licking their chops" at the buying potential, according to one venture capitalist who was not authorized to speak on the record.
It could also mean big business for financial sponsor bankers, some of whom are so tight with their clients they work out of their offices, industry insiders said. Private equity firms are merely waiting for stock prices settle — and for corporate boards to warm up to the idea that a buyout might just be the best option for shareholders.
When that happens, these are the bankers they will call.