PE-backed firms revise fortunes

The number of chief financial officers (CFOs) of private equity-backed companies expecting revenue growth has fallen, statistics show.

Findings from professional services firm Deloitte reveal that the proportion of CFOs forecasting revenue growth has fallen from 70 per cent to 54 per cent.

Despite the fact that revenue growth remains the top priority for 40 per cent of the 70 CFOs questioned, optimism has become more subdued during the past 12 months.

Second on the list of CFOs’ top priorities is protection of margins, up from 11 per cent in 2011, to 24 per cent in 2012.

The proportion of CFOs planning to exit a business in the next year fell from 18 per cent to only 4 per cent.

For those that are considering a sale, some 62 per cent highlight a trade sale as the likeliest source of route, either internationally (44 per cent) or in the UK (18 per cent).

Secondary buy-outs sit in second place of projected exit options with 34 per cent saying that is the route being explored.

In a year of relatively few IPOs, exit through an offering has fallen from 17 to 4 per cent.

Emma Cox, lead partner for Deloitte’s private equity-backed business team, says the survey results reflect current market sentiment.

However, she adds, ‘It is good to see that, despite the current recessionary woes blighting the UK and concerns around the Eurozone, 54 per cent of CFOs of private equity-backed businesses are optimistic about revenue growth over the next 12 months and a number of them remain focused on preparing the business for sale.’

Further findings from the Deloitte survey show that capital remains the primary demand from CFOs of private equity investors (at 51 per cent), followed by input at board level (21 per cent) and M&A skills (14 per cent).

Chris Hyams, head of private equity at Deloitte, comments, ‘Historically, funding has been the main requirement of a private equity house from an investee company.

‘However, as markets have become more challenging in recent years, we have seen a shift in focus to a greater emphasis on strategic and consultative advice.’

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

Related Topics