I’m not exactly a fan of private equity …

… but an E&Y study I wrote about yesterday claims they are creating value — with returns higher than the public markets — with some new “levers.” I’m not so sure. The businesses they have acquired are earning higher valuations on exit because the stock of their public-company peers is doing well.  “Multiples, which compressed significantly during the post-crisis years and negatively impacted performance, have rebounded in the recovery period and accounted for 30 percent of overall PE returns,” the E&Y report says.  And what about  the value to the U.S. economy of all these high returns?  PE firms are doing hordes of dividend recaps again, so the money is going to high net-worth and institutional investors. Is it driving jobs? Who knows.

(Click here for an interactive version of a chart on how PE-backed companies are driving EBITDA growth now versus pre-recession.)

Organic Revenue Driving Returns?

About vincentryan2013

Editor in chief, Digital Platforms, at CFO Publishing
This entry was posted in Corporate debt, Corporate finance, Leveraged buyouts, M&A, Private equity, Uncategorized and tagged , , , . Bookmark the permalink.

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