Firms to get hands-on

A third of private equity firms are preparing to become more involved in the running of portfolio companies next year according to new research.

A survey of 222 senior executives in Europe and the US conducted by the Economist Intelligence Unit found that 33% of respondents expect to intervene in the operating of their investee businesses in light of the economic downturn.

The research, which was commissioned by management consultancy Celerant, also found that twenty-six percent of respondents said there were preparing to hire new staff, and just 2% said they intended to cut the size of their teams. Seventeen percent said operational specialists were the highest priority, followed by industry experts and financial analysts (both 115).

David Axon, head of private equity and M&A, at Celerant, said: “The private equity industry finds itself at a critical junction. Over the next year there will be a marked shift from investment and financial re-engineering to focusing on the operational performance of existing portfolio companies.

“This does not mean enacting brutal cuts to slash overheads, it requires focusing on day-to-day processes to ensure that these are improved in a sustainable manner. Shrewd executives realise that maximising their operational efficiency will ensure their short-term survival and guarantee long-term growth.”