18 Martie 2009
Roland Berger: companies bought by PE funds outperformed the market by 25%
Performances of the companies bought by private equity funds marked a roughly 15% increase in revenues than the market average, combined with a 25% outstep in terms of profit, according to Roland Berger Consultants survey.
“The great performance stemmed from a thorough selection of companies under management, furnishing a professional team with power to manage, and a result-oriented performance management. Nevertheless, in the coming period, the adverse market conditions and rampant borrowing costs, ballooned by tougher conditions in various sectors, will spark a more acute intervention in operating sector of companies within portfolio,” said the managing director of Roland Berger Romania, Codrut Pascu (photo).
As the acquisitions and profitable sales are more difficult, the leveraged buyout firms make ample efforts to improve operational performances.
"Private equity companies expect the average holding period of portfolio investments to increase from 4 years in 2006 to 5 years today," says Thomas Rinn, Partner in Roland Berger's Operations Strategy Competence Center, and the author of a new research on investment funds’ operating performance.
In Romania, the investment funds were over the past few years the maverick investors that transformed companies and sometimes even entire economic sectors (ie: drug manufacturing and construction materials).
“Private equity firms with a large-cap focus are increasingly professionalizing their support capabilities for operational performance improvement,", said Thomas Rinn.
Their answers confirm that investment funds user various management tools to ensure they stay on course for value growth, for example, the “100-day plans”. Performance levers are typically addressed in several waves at the beginning of the investment. "In the first wave, private equity firms optimize procurement management, overhead structures and working capital. In wave two, they go in for portfolio, footprint and supply chain optimization. In the final wave, they optimize sales and R&D.
Although they try to ensure board representation, they do not focus sufficiently on employing specific experts for each phase of their investment.95% of private equity executives say they assign one single team for the entire investment lifecycle.
As the acquisitions and profitable sales are more difficult, the leveraged buyout firms make ample efforts to improve operational performances.
"Private equity companies expect the average holding period of portfolio investments to increase from 4 years in 2006 to 5 years today," says Thomas Rinn, Partner in Roland Berger's Operations Strategy Competence Center, and the author of a new research on investment funds’ operating performance.
In Romania, the investment funds were over the past few years the maverick investors that transformed companies and sometimes even entire economic sectors (ie: drug manufacturing and construction materials).
“Private equity firms with a large-cap focus are increasingly professionalizing their support capabilities for operational performance improvement,", said Thomas Rinn.
Their answers confirm that investment funds user various management tools to ensure they stay on course for value growth, for example, the “100-day plans”. Performance levers are typically addressed in several waves at the beginning of the investment. "In the first wave, private equity firms optimize procurement management, overhead structures and working capital. In wave two, they go in for portfolio, footprint and supply chain optimization. In the final wave, they optimize sales and R&D.
Although they try to ensure board representation, they do not focus sufficiently on employing specific experts for each phase of their investment.95% of private equity executives say they assign one single team for the entire investment lifecycle.