How Top Firms Drive Value in Private Equity

Contributed by guest writers Michael Greenspan & Katja Pempelfort, Kiddy & Partners

The numbers have been run, the tyres kicked. Legal experts have weighed in on regulation and intellectual property issues. Your due diligence has been thorough, and your business case is airtight. 

But one nagging concern remains: can the management team actually deliver the performance shift required? 

In private equity, and investing in general, people-related changes are a typical,  and integral, part of the equation. In fact, according to a recent study by Alix Partners,  73% of portfolio company CEOs are likely to be replaced following a leveraged buyout, and for 58% this happens within two years. 

Management transition is more common than not – and management reliability and performance central to delivering on most investment theses, particularly in a market where capital is plentiful, valuations are high and exits challenging.

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