2012 Private Equity Survey

Annual private equity survey finds firms spurring growth for investors and the economy

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Our most recent private equity industry survey found firms focusing on a variety of performance improvement initiatives, with a growing trend toward greater operational involvement at portfolio investments.

The 2012 private equity industry survey, conducted in partnership with the research firm PitchBook, represents responses from more than 100 private equity firms across the country and provides some important insights on current trends and strategies for driving value creation.

Among the private equity survey data:

  • Nearly two-thirds of firms reported increased employment at their portfolio companies. One of the most striking findings from the survey was that about two-thirds (65 percent) of private equity firms reported increasing headcounts at their portfolio companies. These results largely contradict recent, widespread sentiment that private equity firms are job killers.
  • Firms are taking a more active role in portfolio company management. Firms reported an increase in their focus on management, operations and strategy to drive value creation, as opposed to reliance on leverage and financial engineering.
  • IT deficiencies pose a challenge to performance improvement. The majority of firms recognize the importance of generating daily and weekly performance metrics to drive and monitor improvement, though deficiencies in portfolio company IT systems continue to be an issue.
  • "On-shoring" is becoming more prevalent as Chinese labor and freight costs rise.As China increases labor and freight costs, survey responses indicate that more companies are returning production to the United States or moving it to closer low-cost countries.
  • Firms will continue to optimize value regardless of tax policy uncertainty. While changes to the carried interest tax rate is more likely to impact fund structure and creation, nearly 40 percent of respondents are currently unsure of whether an increased rate will have a significant impact on investments and operations. Instead of worrying about upcoming tax rates, firms appear to be concentrating their attention on developing tax-efficient structures that provide future benefits.