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Creating value beyond the deal: private equity
Global deals value in 2018 reached their second highest value since the 2008 financial crisis, driven by robust global demand for assets by both private equity and corporate buyers. There has however been a decline in the volume of winning deals, those that create significant value relative to the purchase price.
We surveyed 100 private equity partners globally and asked about their experiences with value creation to understand how they realise maximum value in their deals. We uncovered that whilst investment capacity at private equity is at an all-time high, cost-cutting is no longer enough to drive returns in today's tough market environment.
What if you looked at your M&A differently?
#BeyondTheDeal
Revenue enhancement
0%
of value-creating deals delivered revenue growth. However, this value lever still received less focus than cost-cutting.
Strategic clarity
0%
of deals that utilised a formalised approach to creating deal value delivered material returns.
Culture and talent
0%
of private equity dealmakers said cultural issues hampered value creation.
Exit strategy
0%
of the dealmakers who say their divestment created value ran their exit process according to a formalised methodology.
Lessons learned for private equity
Similar to our corporate survey, our research found that if dealmakers were to do their deal again, they would prioritise value creation earlier.
Conversely, respondents state that rebranding and operating model changes should not have been day one priorities. So, what makes a good value creation plan? All plans aren't created equal and so it is crucial that the levers for realising the blueprint are comprehensive, covering: target operating model, culture, and consideration of tax, to name a few.
What were your priorities on Day One and what should they have been?
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Contact us
Eric Janson
Global Private Equity, Real Assets and Sovereign Funds Leader, Partner, PwC United States
Tel: +1 617-834-4900
