We highlight the key developments and latest industry trends across the markets
- Exit environments
- M&As and roll-up strategies
- Post-merger Integration
- Private Credit
- Value creation
What is the impact of “Buy-and-Build” Private Equity strategies on LBO Value Creation?
Case study on buy and build
Pages 58 to 84 shares a very detailed look at how Investcorp successfully executed the buy-and-build strategy for its investment in Berlin Packaging
The Fabric of Belonging: How to Weave an Inclusive Culture
Building an inclusive culture
Bain & Company's playbook on building an inclusive culture
How CVC Has Made $8.2 Billion From Formula One Auto Racing
Classic value creation case study
Detailed into the CVC - F1 case study
Partners in time: Private equity, ISP and playing the long game
A successful case study of how the Swiss private equity manager Partners Group has defied buyout industry norms with its protracted ownership of global schooling giant ISP
Post-Merger Integration Challenges in Lafarge-Holcim Merger
Case study of regulatory challenges
How Holcim and Lafarge strategically used a series of delays and regulatory challenges to become a leading cement company in the global market.
Using SASB Standards & complementary tools in PE
Partners Group has developed an industry-leading approach to responsible investment, which takes into account industry ESG standards and principles, such as those outlined by SASB, and the UN Principles for Responsible Investment (PRI).
Single-asset deals: The ultimate win-win
Single asset deals
Why single asset deals might be preferable to a traditional hold followed by a trade sale or secondary buyout.
Value Creation in Private Equity
Successful execution does generate value creation
This paper examines value creation using confidential value creation plans and their execution.
Reimagining Talent in M&A
Talent retention during integration
With survival and growth riding on a company’s ability to hire the best talent, more executives are finding creative ways to solve the people equation.
Executing a successful bolt-on or buy-and-build strategy across Europe
Legal and operational considerations
Executing M&A within Europe can give rise to specific cross-jurisdictional challenges depending on the countries in question, which can be relevant from as early as term sheet stage.
Responsible Investing: The ESG-Efficient Frontier
ESG angle to portfolio optimization
The paper proposes a theory in which each stock’s environmental, social, and governance (ESG) score plays two roles: 1) providing information about firm fundamentals and 2) affecting investor preferences. The solution to the investor’s portfolio problem is characterized by an ESG-efficient frontier, showing the highest attainable Sharpe ratio for each ESG level.
Fix them first: Executing regulation-driven separations
Remedies if deal cancelled for regulatory reason
A better understanding of the remedies that antitrust regulators may hand down in a large merger or acquisition could help executives improve their management of such deals.
Blackstone’s New Twist on Private Credit Will Open Up Billions
How Blackstone is bringing private credit to the high net worth market in Europe
Blackstone Inc. is testing a new way to bring in cash from rich Europeans. If it succeeds, the private equity powerhouse stands to draw billions to the fast-growing and risky world of private credit.
Apollo’s private debt business
A series of case studies on Apollo's lending solutions
Case studies of innovative lending and capital solutions by Apollo Global Management
How one approach to M&A is more likely to create value than all others
Programmatic M&A as the best approach
Two decades of research show that, while large deals still have their place, programmatic M&A strategies continue to create gains in excess total returns to shareholders, at lower levels of risk.
Rebuilding M&A Capabilities for the Post–Covid-19 World
As dealmaking becomes more complex, acquirers need to focus on five areas.
Post-Transaction Integration: It’s All About the People
Human element of post merger integration
The merging of two entities will undoubtedly ruffle some feathers, and human capital should be the focus of developing an effective post-transaction strategy
Equity Incentives at Publicly Traded vs. Private Equity Owned Companies: Is There a Difference?
Management team incentivization
Equity compensation for senior management of private equity owned companies is very different than that of publicly traded companies. While both types of companies share a common principle of rewarding management based on an increase in shareholder value, fundamental differences in the investors and their potential holding periods drive divergent equity compensation practices.
Illuminating Investment Horizons
Various long term vehicles
The article examines the growing prevalence of permanent capital vehicles (PCV), annex funds, and continuation funds.
ESG due diligence in private equity: legal developments and emerging best practices
ESG due diligence
The emerging ESG due diligence best practices, and the legislative and regulatory framework informing and reinforcing these developments.
Added complexity for PE firms as UK funds fall outside of EU regulation
UK outside of EU regulation
U.K.-domiciled private equity funds fall outside of the EU regulatory framework that allows general partners to market to investors across the bloc following Brexit, creating complexity for firms that previously relied on these rules.
Europe’s private debt managers embrace ESG-linked loans
ESG has become an increasing focus for private debt managers
There has been significant increase in the issuance of debt linked to environmental, social and governance (ESG) metrics, seen in almost all new private debt deals in Europe
Bain’s Bedrock Beliefs on How to Create Value from M&A
Repeatable model for M&A
Bain and Company shares a repeatable M&A model that helps to generate higher total shareholder returns.
When It Comes to M&A Deals, First Impressions Are Everything
Early signs of whether M&As will work
A new book on mergers and acquisitions by two Deloitte executives argues that a positive “announcement day” reaction to a deal bodes well for future stock performance — and vice versa.
Rethinking the M&A process: Learning private equity’s secret to outperforming corporate strategic acquirers
PE backed M&As add more value
M&A transactions often destroy shareholder value for corporate strategic buyers, but PE firms have fared much better. What is the secret sauce behind the PE M&A playbook?
The future of M&A 2022 M&A Trends Survey
Latest M&A trends
Deloitte’s 2022 Future of M&A Trends Survey polled 1,300 executives at corporations and private equity investor (PEI) firms from August 26 through September 7, 2021 to glean insights about current deal activity and expectations for the next 12 months.
Pricing and Value Creation in Private Equitybacked Buy-and-Build Strategies
Analysis of buy & build strategies
Study on the value creation achieved by private equity manager employing buy and build strategies. Findings show that despite paying higher premiums, PE firms generate above-average equity returns in buy and build strategiesdue to both higher top-line growth and multiple expansion.
Raising Sector Strategy to the Next Level
Having a calculated sector sourcing strategy
Every sector—not just the “growthy” ones—can produce top-tier returns, but generating those returns requires matching a firm’s unique strengths to the sectors where they will bear the most fruit. Those decisions have historically come from the gut, but new data tools are finally giving firms a fact-based way to raise their game.
Can Private Equity Funds Act as Strategic Buyers? Evidence from Buy-and-Build Strategies
European buy and build has been value adding
This study examines buy-and-build strategies in seven major European markets, and has found that the operational improvements are consistent with the synergy interpretation and indeed outperform single company growth strategies.
What Is Your Business Ecosystem Strategy?
Creating a business ecosystem
Every industry has a business ecosystem, which comprises dynamic groups of largely independent economic players working together to deliver solutions that they couldn’t muster on their own. Drawing upon years of research, BCG offers a step-by-step framework for developing an incumbent company’s ecosystem strategy.
Case Study- Post-merger integration for a healthcare company
Merger integration case study
Case study - Creating a post-merger integration structure for home healthcare acquisitions to reduce overhead and implement best practices
Post-close excellence in large-deal M&A
Four practices to ensure successful mergers for large deals
The most successful large-deal transactions follow four key practices during integration execution.
What all successful mergers share: Modern data integration
Data integration in mergers
In today’s M&A environment, success requires integrating data stacks and business systems as quickly and seamlessly as possible.
IT Integration In M&A: The Complexities and Best Practices
Best practice in M&A merger integration
Since many businesses are digital in their core, more times than not a significant bulk of effort goes into technology merger integration.
Bringing Science to the Art of Revenue Synergies
Scientific approach to revenue synergies
Revenue synergies are becoming critical for deals in today’s high-valuation environment. But unlike cost synergies, revenue synergies are difficult to size and to realize. How should you go about estimating revenue synergies?
Synergy in Mergers and Acquisitions: Typology, Lifecycles, and Value
Five sources of synergies
An academic look at the five distinct sources of synergies.
Don’t Settle for Anything Less Than Full-Potential PMI
Pursuing full-potential PMI rather than good-enough PMI
Many companies struggle with post-merger integration (PMI). But with the right mindset, organizations can take advantage of PMI to achieve broader transformation—what BCG calls full-potential PMI
How to Better Navigate Your Team Through a Merger or Acquisition
10 ways leaders can create a people-centric strategy to support their employees through acquisition
Providing the right support for staff integration is known to increase the chances of a successful merger but leaders often prioritise timescale and the finances over their people. Thom Dennis, CEO of Serenity in Leadership shares 10 methods by which leader can support their people through M&A
Winning at private-equity integrations
Five practices to ensure successful mergers
Private-equity firms use add-ons to scale portfolio companies, but poor integrations impact results. Five practices can ensure that deals flourish.
The Cross-Border Buyout Next Door
GPs with local offices outperform
The paper finds that portfolio companies backed by local offices outperform cross-border buyouts in terms of operational improvements.
The eight essentials of innovation
How do large organizations innovate
Strategic and organizational factors are what separate successful big-company innovators from the rest of the field.
Mastering the Art of Breaking Up
The playbook of divestiture
Divestitures continue to be important tools to raise cash, optimize portfolios, and achieve a variety of other corporate objectives. This is BCG's playbook.
Flipping the Odds of Digital Transformation Success
Successful digital transformations are rare. But companies that get six factors right can flip the odds of success from 30% to 80%.
A Left-Brained Approach to Portfolio Company Talent Decisions
Strong management can make or break a deal; there’s no debate about that. Yet PE firms often struggle to put the right people in the right roles fast enough to enhance portfolio company value. Making faster, better decisions depends on linking talent strategy directly to the explicit roles and missions laid out in the value-creation plan and spelling out exactly what’s needed to execute.
Future-proof production: Next Generation Manufacturing as a solution where traditional efficiency levers fail
The traditional levers for reducing costs and increasing efficiency have in many cases been exhausted, but there are new approaches that can be used to draw on today's disruptive trends to position the industry for the future.
Real-World Supply Chain Resilience
Supply chain optimization
BCG's playbook on making the supply chain more resilient without sacrificing cost effectiveness.
Private Equity Wakes up to Outsourcing
Private equity operations
How private equity organisations can optimise operations through outsourcing
A playbook for newly minted private equity portfolio-company CEOs
Playbook for CEOs
CEOs who helm companies owned by private equity (PE) firms face a leadership challenge unlike any other. They must master everything a great public- or private-company CEO does, all while operating at a higher metabolic rate. This article shares guidance from the experts.
Market Timing in Private Investments
How to time the markets
This time examines whether GPs have been able to take advantage of market timing.
Continuation funds: How GPs are holding on for longer
Extending holding period via continuation funds
Continuation funds are a rebranding of general partner-led secondaries. The purpose is twofold: to hold onto investments in the hope of making bigger returns at a later date, and to provide a potential exit for LPs.
Food Fight: An update on private equity performance vs public equity markets
Private equity performance
JP Morgan's bi-annual report assessing the performance of the private equity industry.
UK mid-market private equity deal activity topped pre-pandemic levels during the first half of 2022, says KPMG
UK mid-market activity remains strong
UK mid-market private equity activity in H1 2022 was above historic levels, despite a decline from record-breaking figures observed in 2021
Creating Value through Sustainability in Private Markets
Value creation from sustainability
This white paper summarizes the actions private-equity investors are beginning to take to create value through sustainability. It identifies five key organizational changes the industry must make along with the barriers and unlocks for private-equity engagement in “grey-to-green” transformation.
ESG and Alpha: Sales or Substance?
How to not fall for greenwashing
Managers of ESG investments create false hope, oversell outperformance, and contribute to the delay of long-past-due regulatory action. How to go beyond greenwashing.
Don’t overlook the G in ESG
Governance is one of the most powerful tools
Governance is often overshadowed by the environmental and social components of ESG, but it is one of the most powerful tools for a private markets firm.
IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements
Creation of a new ISSB
The IFRS Foundation Trustees has announce three significant developments to provide the global financial markets with high-quality disclosures on climate and other sustainability issues.
Measuring Stakeholder Capitalism Towards Common Metrics and Consistent Reporting of Sustainable Value Creation
Creating a standard set of metrics
The World Economic Form proposes a set of common metrics based on four pillars.
The future of sustainability reporting standards
Overview of sustainability reporting standards
This report highlights the current state of play in terms of ESG reporting across the globe as well as the history and future of the industry.
Aggregate Confusion: The Divergence of ESG Ratings
Divergence of ESG ratings
This paper investigates the divergence of environmental, social, and governance (ESG) ratings based on data from six prominent ESG rating agencies: KLD, Sustainalytics, Moody’s ESG (Vigeo-Eiris), S&P Global (RobecoSAM), Refinitiv (Asset4), and MSCI.
Regulatory Headwinds Blow Stronger in 2021
Regulatory headwinds for managers in Europe
This report reflects the major regulatory headwinds for private equity managers in Europe.
Crackdown: FTC and DOJ aim to rewrite merger guidelines
FTC and DOJ seeking to be stricter around M&As
The US Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division announced a comprehensive review of horizontal and vertical merger guidelines, to assist in the identification of anticompetitive transactions and “modernise enforcement of the antitrust laws regarding mergers”.
Investment industry welcomes SEC efforts to reform private equity fees
SEC pushing for fee reporting reform
The Securities and Exchange Commission proposed that private equity funds should provide standardised quarterly data on fees, expenses and performance, in a move that would transform disclosure standards and curtail managers’ ability to present potentially misleading information to investors.
The SEC Thinks the Lack of Transparency in Private Markets Is a Risk to Investors. The Commission Wants That to Change.
SEC pushing for greater transparency
Industry experts talk about what’s next for private companies now that transparency is on the top of the regulator’s mind.
SEC Proposes to Enhance Private Fund Investor Protection
SEC proposing new rules to enhance regulator of private fund advisers
The Securities and Exchange Commission has voted to propose new rules and amendments under the Investment Advisers Act of 1940 (Advisers Act) to enhance the regulation of private fund advisers and to protect private fund investors by increasing transparency, competition, and efficiency in the $18-trillion marketplace.
Direct Lending’s EDG Revolution
ESG in private debt
ESG in direct lending is progressing from merely a high-level screening of investments to a more sophisticated incorporation of ESG considerations throughout the full investment life cycle, compelling total integration into a firm’s DNA, which often results in a permanent and significant cultural shift.
Private debt fund returns, persistence and market conditions
Private debt returns
This paper examines net-of-fees private debt fund performance, performance persistence across funds managed by the same general partner and a general partner’s ability to time the market. The paper finds that private debt funds outperform bond and equity market benchmarks in the cross-section, with high performance dispersion across strategies and performance quartiles.
Weak Credit Covenants
Problem of weak covenants
This HBS report examines the relation behind contractual complexity and issuance spreads of over 1,000 private credit agreements.
Five Facts About Direct Lending to Middle-Market Buyouts
Direct lending in mid market
Using a proprietary data set of private credit agreements, the paper provides the five benefits of nonbank nonbank direct lending to private equity (PE) middle-market buyouts.
Direct Lending: Evidence from European and U.S. Markets
Direct lending in Europe and US
Using a proprietary dataset, the paper presents new empirical facts about direct lending funds and investigate the demand and supply drivers that have likely contributed to the growth of the asset class.
Private Debt in Germany
Direct lending in Germany
The private debt opportunity in Germany.
Juicing up Private Debt
Adding leverage to private debt
Low interest rates and fierce competition are putting pressure on fund returns. Experts share whether taking on additional risk to boost return is a sensible strategy.
Finding Value in Today’s Credit Market
Opportunities in private debt
Today’s credit market is more competitive than ever, yet compelling opportunities exist for investors who know where to look. Carlyle’s Head of Global Credit Mark Jenkins shares his views on where to uncover value in the current market environment.
Call of the Market Wild
Private debt in rising rate environment
The role, importance and outlook of private credit in a rising rates environment.
2022 Global Credit Outlook
Blackrock highlights three key investment themes for credit.
Democratization of private equity
Increasing access to non-institutional investors
Advancements in private markets could unlock a wave of interest from retail investors and defined contribution plans.
Limited Partners and Private Equity Firms Embrace ESG
Current state of ESG integration amonst GPs
LPs are embracing ESG integration at increasing rates. Although challenges remain to accurately monitor and measure ESG, a thoughtful approach to ESG integration is becoming a must. LPs and GPs can take advantage of a growing number of tools and options as they plan concrete strategies, set priorities, balance environmental and DEI initiatives, and conduct ongoing evaluations to monitor ESG progress.
McKinsey Global Private Markets Review 2022
Overview of buyout activity environment
McKinsey & Company's annual review of private markets activity and outlook for the industry.
Private Equity’s Inflation Challenge
Dealing with inflation
While most fund managers have never had to deal with inflation, they have certainly benefited from its absence. Now it poses the dual threat of rising costs for portfolio companies and muted multiple expansion during ownership. Firms can do a lot to mitigate inflation’s impact, but the time to start is well before it begins affecting performance.
Successful Merger Integration
Successful merger integration
BCG's playbook on successful merger integration.
Buy-and-Build: A Powerful PE Strategy, but Hard to Pull Off
What buy and build really means and how to succeed
Buying a strong platform company and building value rapidly through well-executed add-ons can generate impressive returns. It is also an increasingly popular strategy. However, it is not as easy as it looks. According to Bain & Company, getting it right hinges on three critical factors.