Private Equity Optimism, Growth Set Stage for Increased Deal-Making

2013 McGladrey Private Equity Survey

Wharton Private Equity& Venture Capital Association is pleased to share with you the annual 2013 McGladrey Private Equity Survey by McGladrey, our corporate sponsor.

For or any questions related to the survey or other services provided by McGladrey please contact Mike Dubin at mike.dubin@mcgladrey.com.

Survey highlights

For the past few years, private equity firms have been hunkered down waiting for signs of an economic turnaround. Having exited companies that they could, these firms held tight to their remaining portfolios, reducing obvious costs and focusing on ways to maximize value. In this paper, you’ll gain insight into what your peers are doing to drive value creation and operational improvement at the portfolio level.

As conditions improve, confidence is returning to the market. More than 125 private equity firms were surveyed.

Here are some of the key findings of the survey:

● Respondents pointed to management capabilities and effective strategy and execution as primary drivers of successful portfolios.

● Despite IT’s higher profile in most organizations, private equity firms often find IT deficiencies in acquisitions. For instance, they uncover outdated business applications for critical functions, such as finance, accounting, sales, and operations. Lack of quality IT personnel and inadequate infrastructure support also become apparent post-sale.

● Private equity firms primarily count on strategy and general tactics for achieving integration targets to successfully deal with add-on acquisitions. They also depend on an active integration leader and established team to achieve success.

● In the wake of an acquisition, private equity firms report they must tackle common financial reporting hurdles such as ease of preparation; daily, weekly, and monthly operating metrics; information timeliness and accuracy; and the month-end closing timeline.

● Just over one-third of respondents anticipate the 2013 increase in the capital gains tax rate will negatively impact deal activity compared with 2012.