Private Equity Value Creation
How to face the challenges of the current private equity environment
Boosted by low interest rates, investments in the alternative asset class of private equity have risen to record levels in recent years. As a result, private equity funds currently possess capital at historic highs. These free funds now need to be invested in companies and multiplied over an investment horizon of three to seven years. What strategies can private equity investors pursue to achieve corresponding increases in the value of their portfolio companies?
The new strategy paper from Porsche Consulting provides an insight into a comprehensive study among market participants in the German private equity industry and offers a guideline on how to pursue the most successful private equity strategies.
- Growth is being evaluated as the most relevant value creation factor with its future importance expected to increase further.
- Sustainability is indispensable. Whereas some see it as a need to fulfill ESG rating requirements, others see in it a chance to create direct financial impact.
- Gaining and retaining talent is key.
- It is recommended to increase direct engagement of private equity investors in their portfolio companies.
- Roles and responsibilities among value creation teams on fund level, company managers, and value creation offices need to be clarified.