It has been the case for many years that business improvement, rather than financial engineering is the main driver for private equity deals and its great to see this being borne out in the data. A strong private equity sector that acquires underperforming companies and sells them when they are transformed, can only be good for the global economy.
“Middle market private equity firms are increasingly focused on value creation strategies to improve business performance in their investments, as opposed to the more traditional leveraged buyout approach. In spite of a frothy M&A market and significant dry powder, this transition is allowing private equity firms to build more meaningful businesses sought after by both strategic and financial buyers. The shift from financial engineering to value creation is enabling private equity to continue to deliver superior returns to the S&P 500,” said David Hellier, ACG New York Board Member and Partner at Bertram Capital.