Private equity set to meddle more in 2009

Private equity firms will increasingly be involved in the day-to-day running of their investments in 2009, according to Celerant Consulting, which hired the Economist Intelligence Unit to survey more than 220 senior private equity executives across Europe and the US.

Operational performance will be key, with 33% expecting to intervene in the running of portfolio companies and 17% putting recruitment of operational specialists at the top of their priorities.

“Private equity companies have to come to terms with the fact that some of their portfolio companies will be worth less than they paid for them,” said Jon Moulton, Alchemy Partners founder. As a result, operational efficiencies will be required to provide required returns in the current debt-starved environment.

“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,” added David Axon, head of private equity and M&A at Celerant.