Patents secured by private equity-backed business between 2006 and 2011 in Europe are likely to be worth €350 billion (£300 million), new research shows.
The European Private Equity & Venture Capital Association has completed a study to discover the effectiveness of private equity investment and finds that, in the 12 largest markets in Europe, private equity invested some €250 billion into 19,400 companies in the five years to 2012.
It concludes that private equity builds businesses are more innovative than non-private equity-backed firms.
Looking at the relationship with patent applications, the report finds that private equity participation increases this process by 25 per cent and reveals that, in some sectors, private equity finance can be up to nine times more effective than non-private equity funding.
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Vincenzo Morelli, chairman of the EVCA, comments, ‘In light of the economic challenges we face in Europe, these findings clearly demonstrate that private equity has an indispensable role to play in delivering responsible, stable investment of all sizes across Europe, regardless of the economic cycle.
‘Private equity drives the innovation, transformation and improvement in performance that can help European businesses survive, thrive and compete in the global economy.’
The EVCA study, in association with Frontier Economics, profiled 60 academic and professional studies.
It also finds that private equity-backed businesses are up to 50 per cent less likely to fail than comparable, non-private equity-backed businesses.
Looking at large businesses, the EVCA says that private equity leads to an improved productivity in terms of EBITDA of 6.9 per cent over six years.