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PE funds find new routes to value creation

Private equity funds are looking for new, creative value creation opportunities in light of the tougher market conditions, according to new data from a survey carried out by global professional services firm Alvarez & Marsal.

Private equity funds are looking for new, creative value creation opportunities in light of the tougher market conditions, according to new data from a survey carried out by global professional services firm Alvarez & Marsal.

According to the survey of nearly 200 private equity investors, almost two-thirds (63%) are looking for new routes to value creation. In addition, one-third (33%) say they are extending value creation plans as exits prove more difficult in a challenging environment. Despite subdued dealmaking activity, private equity investors still favour acquisitive strategies, with just a quarter (25%) choosing organic growth over M&A.
 
Private equity firms are also instilling a heightened sense of urgency to value creation activities. According to the survey, 74% of private equity executives prefer to launch their value creation programme either immediately following acquisition or in the first three-to-six months after the transaction.
 
The data also indicates that digital transformation is becoming increasingly important. The vast majority (84%) of respondents see digital infrastructure as critical for successful transformation projects, with half (49%) considering it from the very start of the value creation programme – a figure which has risen by 12% since 2022.
 
Automation in particular seems to be a focus for investors, with 43% looking to identify areas where technology can help to further automate the business.

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