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Publish Date

Oct 18, 2024

A&M Value Creation in Private Equity Report

Tying Transformation to Exit Strategies in the Current Economic Environment Across North America

Private Equity (PE) firms are sensing a potential recovery in the M&A market, with deal values rising 42% in Q2 2024 compared to the previous year, although the number of transactions fell by 7.4%. Challenges remain, including high interest rates, inflation and supply chain issues, leading to a valuation mismatch that hampers PE exits and results in record low distributions to limited partners (LPs). However, optimism is growing as the Federal Reserve begins to cut interest rates and inflation stabilizes.

A&M’s Value Creation in Private Equity Report aims to provide insights for PE leaders as they navigate these challenges and prepare for future opportunities. Private Equity Performance Improvement (PEPI) Managing Director Markus Lahrkamp and Director Rachel Jurgensmeyer surveyed 50 PE investors, operating partners and
C-suite portfolio company managers across North America to understand how their investment and value creation strategies have evolved in response to the tougher environment, as well as how they are preparing for a new cycle. The survey responses uncover the value creation strategies put in place as the industry makes new headwinds and outline an improved outlook for the global economy in 2024.

Key Findings

  • Technology is becoming an important tool to drive value creation
  • Value creation planning is critical throughout the transaction cycle
  • Investors are interested in diversifying revenue streams, optimizing supply chains and enhancing customer engagement through data-driven insights
  • Firms are focused on applying AI to specific and tactical use cases
  • Expanding digital capabilities with AI is increasingly considered as a value creation margin improvement lever
  • Firms looking for new value creation levers are increasingly investing in digital transformation strategies
  • Organic growth, rather than buy-and-build acquisition strategies, is the preferred value creation strategy

How A&M Can Help

For 40 years, A&M has helped management teams unlock value and enhance performance through an operational, action-oriented approach. Our experts support clients during due diligence, the sign-to-close process and value creation planning, emphasizing topline growth, operational excellence and working capital initiatives. We also specialize in exit readiness programs, positioning businesses for sale with solid operating plans.

 

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