|  12.02.2013

How private equity directors can work more effectively to create value

The “Working with Private Equity Portfolio Companies, “study by KPMG and Directorbank identifies strong operational expertise as a key differentiator between private equity firms.

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KPMG and Directorbanksurveyed over 300 senior executives, non-executive directors and management at portfolio companies to identify which skills they valued most in their private equity backers. The study also included in-depth interviews with 20 of the participants, each of whom was a senior executive with experience working in several private equity-backed businesses.

The research showed that:

  • All participants credited private equity with adding value, with 40% estimating this contribution as more than 25% of the value uplift upon exit
  • Respondents were also asked to rate the quality of the private equity director’s involvement in the business, with 58% rating it as good or better and 18% as excellent
  • Those surveyed considered the better firms to contribute operationally either from within the firm or through operational partners and contacts
  • Respondents ranked the ways in which private equity contributed to value increase, as follows:

1.    Provision of capital to grow business

2.    Optimisation of business plan

3.    Removal of constraints on management

4.    Bringing in operational expertise


Participants consistently rated the input they got during the pre-deal and completion phases as well as on exit, but felt that private equity firms capable of providing operational support added the greatest value. Private equity executives are still drawn predominantly from financial, M&A and management consultancy backgrounds, but increasingly private equity firms recognise the need to bring in operational expertise.


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