Value Creation In Private Equity

Foreword

Private equity (PE) has traditionally relied on picking the right investment to release value through business transformation post-deal.

PE returns have traditionally had a component of financial leverage, multiple arbitrage and value creation — usually considering a combination of all these factors whilst surfing a wave of low interest rates and natural market expansion.

As those factors seem to evolve and fade — base rates have normalized, dry powder tops US $1.0tn, and there is more than US $3.0tn backlog of unsold assets in the exit pipeline — it becomes clear that the industry will need to evolve into looking for more sophisticated ways of creating tangible value in ever increasingly disputed markets.