Report reveals value of private equity backing for NW firms
A new report into the impact of private equity support for businesses has shown that PE-backed firms in the North West have seen EBITDA (earnings before interest, tax, depreciation and amortisation) growth of 65% over the latest three-year period.
The inaugural Private Equity Value Report from Real Deals, developed in association with BDO, found that the region outperformed the UK average.
Nationally, growing PE portfolio companies achieved an average EBITDA increase of 58.9% over the same three-year period, while average revenues grew by 22.2%.
Accountancy and business advisory firm BDO commissioned the research to understand the impact that private equity investment is having on the growth of the regional economy. The data was drawn from the most recent three years of accounts filed with Companies House.
The fastest growing 25 businesses in the North West saw average EBITDA growth of an impressive 133% over three years and included: Liverpool-based Mowgli Street Food; Manchester-headquartered furniture manufacturer and designer, Neville Johnson; and recycling and waste management services business, Recycling Lives, located in Preston.
The top 25 showcased a range of sectors from technology to care and hospitality and the most featured investors in the region were LDC, 3i Group and BGF.
James Fieldhouse, M&A Partner at BDO, said: “Despite the challenges of the past three years, this research demonstrates PE-backed businesses are a resilient and dynamic segment of the region’s economy.
“There’s often a focus on the level of deal activity and headlines around exits but we should also celebrate the value created by investors and management teams working hard to deliver against their growth plans.”
The fastest-growing PE-backed businesses in the region created an additional 992 jobs between 2020 and 2022.
BDO’s latest bi-monthly Economic Engine survey of 500 mid-sized businesses revealed that 22% of North West businesses are either currently looking for private equity investment or will do so in the next three months, whereas 78% shared they wouldn’t consider PE-backing with the biggest barriers cited as not knowing how to approach private equity houses or how to engage the right adviser.
BDO M&A partner, Claire Frangou, said: “This report really validates that private equity has once again been a real force for driving growth, with the associated innovation and job creation in the North West.
“Looking ahead, there is a significant opportunity for the region which is home to so many entrepreneurs and high quality businesses. Manchester is home to Europe’s second largest PE community, with substantial capital and appetite to back more growing businesses. The challenge appears to be connecting the two.”
