Private equity (PE) owned companies have continued to grow turnover and staff numbers during the recession, says a new report and survey published by PwC.
‘Looking to the future – Private equity backed company survey, 2011’ finds that growth is back at the top of the corporate agenda for PE backed companies, overtaking cost cutting as the main priority. Nearly 60% of PE backed companies believe they will grow in the coming year, and a similar number believe they will generate greater profits than during the recession. Indeed, acquisitions are firmly on the agenda for the vast majority of management teams.
Nigel Reynolds (pictured), partner, PwC, says: “What is most surprising is that many of these companies have continued to grow through the downturn. Although there are concerns about debt levels, the economy and the availability of high quality staff, the general sentiment is positive.”
Debt pressures remain, with some 80% of those polled needing to re-finance by 2015. The recession has also meant that many PE companies have changed their plans for exit. Half the companies polled have pushed back their planned exits dates by an average of three years and over a third said their PE owners have injected more capital during the downturn.
The report shows how the majority of PE backed companies are fully aligned with their PE houses on timings, type of exit and valuation, and are particularly positive about how they manage relationships with banks. However, many management teams have adjusted down the level of return they expect to make in this economic cycle and are concerned about their ability to offer adequate incentives to attract high-calibre staff.
