Private equity-backed companies optimistic about growth
PRIVATE equity-backed companies remain focused on growth and expect to increase both turnover and profitability in 2012, according to a PwC report.
Eight out of 10 expect to grow turnover and almost three quarters anticipate EBITDA growth, says the accountancy firm. Its report draws on analysis of market trends and a survey of management teams from 77 private equity (PE)- backed companies, including 13 from the Midlands.
To reach their optimistic growth targets, 60% of PE portfolio companies expect to increase permanent headcount in the coming year and say that their PE houses are ready to inject additional capital should it be needed.
The findings also suggest that PE houses are looking to invest for the longer term, with a view to helping their businesses withstand the downturn. More than two thirds of the management teams said they expected their PE houses to invest for growth, and this was most prevalent among the larger companies.
Steven Kentish, partner and private equity leader for PwC in the Midlands, said: “With its focus on growth, private equity has a critical role to play in the UK’s recovery and is well aligned with the Government’s efforts to rebalance the economy.
“However, management recognise that 2012 is likely to be another tough year for companies seeking to secure financing and new funding.
“Management teams at PE- backed companies need a clearly defined strategy to achieve their ambitious growth targets. As well as the willingness to invest, they need to focus on efficiencies to give their businesses the best chance to weather the increased uncertainty in the marketplace and improve their EBITDA and bank covenant headroom.”
