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Value Creation – CEPRES Proves Private Equity Gets It Right

CEPRES released a unique analysis that demonstrates Private Equity is enhancing value in operating companies. By analyzing thousands of PE-backed Operating Companies, CEPRES found that since the Global Financial Crisis (GFC) there has been a steady and significant increase...

CEPRES today released a unique analysis that demonstrates Private Equity is enhancing value in operating companies. By analyzing thousands of PE-backed Operating Companies, CEPRES found that since the Global Financial Crisis (GFC) there has been a steady and significant increase in Average Compound Annual Growth Rate (CAGR) of EBITDA for PE-backed Companies.

Further, CEPRES found that increase in valuation of companies post GFC is driven more by EBITDA Growth than prior years. This evidence supports the view that Activist PE Fund Managers are effective and able to deliver on the promise of delivering returns through Value Creation. CEPRES also found that valuations are currently being driven by increased market pricing – commonly called Multiple Expansion.

  • CAGR of EBITDA for PE-backed companies has significantly and steadily increased since the GFC
  • EBITDA Growth is now a larger contributing factor to Exit values than pre-GFC
  • Exit values are also currently driven by market pricing (Multiple Expansion)
  • This is the first empirical evidence of value creation at work in private equity

“There has been significant speculation about the role of private equity managers as activist investors and whether they actually create value. Now, for the first time ever, we have hard evidence for investors (LPs) and fund managers (GPs) to benchmark their investee companies. It is positive to see such a clear trend and to have the ability to measure and compare these results when investing in private equity. There can be variations for different strategies, sectors, etc. and we encourage participants to get in touch for specific samples” says Dr. Daniel Schmidt – CEO, CEPRES GmbH.

Next Finance , September 12

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