Today Gotham Consulting Partners released the results of a private equity survey on operating value creation. Not surprisingly, buyout pros said operating value improvement was the most important “lever” and financial leverage was the least important.
It’s a nice gauge of buyout pro sentiment, no doubt, but I wonder how helpful it is to know what buyout pros say they value without data to support it. No buyout firm in the country is going to say financial engineering and leverage is its most important tool, nor would a firm admit that it doesn’t really add much, operationally, to its portfolio companies. The contradictions are even apparent in the survey: Despite “operational improvements” being in vogue since the credit crunch, the survey revealed that due diligence approaches have not changed much in recent years, and that approaches to portfolio management are still pretty much the same. Even the recent trend of adding operating partners to buyout firm rosters seems to have topped out with the onset of private equity layoffs, the survey states.
Get the full survey results below.
Gotham Survey Results