Private equity vital to mid-market firms, says survey

Over half of buy-out companies say that their private equity backers add significant value to their business, according to a survey from law firm Eversheds. Just under two-thirds of respondents had achieved their business objectives, with half of these outperforming their plans.

Just under two-thirds of respondents had achieved their business objectives, with half of these outperforming their plans.

At odds with recent criticism of private equity firms, headcounts in three-fifths of the buy-out companies had gone up, with 18 per cent losing staff and 22 per cent remaining unchanged.

Richard Moulton, corporate partner at Eversheds, comments: ‘In the mid-market sector we are not dealing with Gordon Gekkos. The vast majority of private equity houses provide a supportive partnership which enables management to achieve their goals.’

For many companies, a private equity-backed primary or secondary buy-out appears to have been the only way to grow the business and provide an exit for the original owners. Only a quarter of the buy-out companies questioned had considered a flotation or trade sale.

However, the survey suggests there are limits to the value a private equity backer can add. Although 78 per cent of companies say their investors had a good or excellent understanding of their business, only 23 per cent receive operational, product or market support.

Eversheds questioned 50 companies which had undergone a private equity-backed buy-out in the last three years. By definition, all had continued in business.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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Private Equity
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