{"id":44066,"date":"2017-08-01T10:25:03","date_gmt":"2017-08-01T08:25:03","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/operational-value-enhancement-in-private-equity-portfolios-a-practical-report\/"},"modified":"2017-08-01T10:25:03","modified_gmt":"2017-08-01T08:25:03","slug":"operational-value-enhancement-in-private-equity-portfolios-a-practice-report","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/operational-value-enhancement-in-private-equity-portfolios-a-practice-report\/","title":{"rendered":"Operational value enhancement in private equity portfolios \u2014 a practical report"},"content":{"rendered":"

Dr. Joachim Dett\u00admar<\/strong> \u2014 Part\u00adner and respon\u00adsi\u00adble for Private Equity h&z Unter\u00adneh\u00admens\u00adbe\u00adra\u00adtung, Munich<\/p>\n

Markus G\u00fcnt\u00adh\u00f6r<\/strong> \u2014 Consul\u00adtant with focus on private equity h&z Unter\u00adneh\u00admens\u00adbe\u00adra\u00adtung, Munich<\/p>\n","protected":false},"excerpt":{"rendered":"

The chal\u00adlenges for private equity funds are incre\u00adasing. Available liqui\u00addity has deve\u00adlo\u00adped very posi\u00adtively over the past six years, aver\u00adaging 19 percent per year (see Fig. 1). This contrasts with a rather stagna\u00adting number of actual tran\u00adsac\u00adtions. In view of this high liqui\u00addity in the market (\u201cdry powder\u201d) and the fact that the number of available target compa\u00adnies has not increased, compe\u00adti\u00adtion in tran\u00adsac\u00adtions is inten\u00adsi\u00adfy\u00ading and multi\u00adples are rising. For inves\u00adtors, this means either over\u00adpay\u00ading for a tran\u00adsac\u00adtion today or not doing it.<\/strong><\/p>\n

High liqui\u00addity in the market chan\u00adges port\u00adfo\u00adlio strategy<\/strong><\/p>\n

When Siemens Audio\u00adlogy was sold to the finan\u00adcial inves\u00adtor EQT, the company achie\u00adved an EBITDA multi\u00adple of 14.8. This is well above the multi\u00adples that have been common in recent years. While multi\u00adples like the Siemens exam\u00adple are not uncom\u00admon today, they do raise the ques\u00adtion of how such deals still gene\u00adrate returns. Clas\u00adsic measu\u00adres aimed at reve\u00adnue growth and finan\u00adcial leverage are unli\u00adkely to be suffi\u00adci\u00adent in most cases. Opera\u00adtio\u00adnal perfor\u00admance is ther\u00ade\u00adfore neces\u00ads\u00ada\u00adrily gaining in importance, even if it is curr\u00adently often negle\u00adc\u00adted, parti\u00adcu\u00adlarly on the cost side, because it is easier to plan and initiate reve\u00adnue enhance\u00adment measu\u00adres \u201cfrom outside\u201d. Cost and value crea\u00adtion struc\u00adtures, on the other hand, are usually very company-speci\u00adfic, which is why stan\u00addar\u00addi\u00adzed outside-in approa\u00adches are not very effective.<\/p>\n

Expert know\u00adledge is needed \u2014 not only about the indus\u00adtry, but espe\u00adci\u00adally about func\u00adtional topics along the entire supply chain, i.e. produc\u00adtion, logi\u00adstics, purcha\u00adsing, as well as cross-func\u00adtional opti\u00admiza\u00adtion topics in terms of busi\u00adness mode\u00adling, stra\u00adtegy and M&A, orga\u00adniza\u00adtio\u00adnal and dimen\u00adsio\u00adning topics.<\/p>\n

The advan\u00adtage of opera\u00adtio\u00adnal measu\u00adres lies in the compa\u00adra\u00adtively rapid, posi\u00adtive effects on profits, which can gene\u00adrally be achie\u00adved by opti\u00admi\u00adzing costs.<\/p>\n","protected":false},"featured_media":41242,"comment_status":"closed","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2552,2559],"product_tag":[1398,1589,2040,2041,2043,2046,2052,2057,2061,2064,2066],"class_list":{"0":"post-44066","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-fyb-2016-en","8":"product_cat-dr-joachim-dettmar-en","9":"product_tag-private-equity-funds","10":"product_tag-transactions","11":"product_tag-dettmar-en","12":"product_tag-joachim-en","13":"product_tag-guenthoer-en","14":"product_tag-markus-en","15":"product_tag-liquidity","16":"product_tag-portfolio-strategy","17":"product_tag-revenue-enhancement-measures","18":"product_tag-value-creation-structures","19":"product_tag-outside-in-approaches","20":"pa_sprache-english-3","21":"pa_sprache-german","23":"first","24":"outofstock","25":"taxable","26":"shipping-taxable","27":"purchasable","28":"product-type-variable"},"yoast_head":"\nOperational value enhancement in private equity portfolios - a practical report - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/operational-value-enhancement-in-private-equity-portfolios-a-practice-report\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Operational value enhancement in private equity portfolios - a practical report - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"The challenges for private equity funds are increasing. Available liquidity has developed very positively over the past six years, averaging 19 percent per year (see Fig. 1). This contrasts with a rather stagnating number of actual transactions. In view of this high liquidity in the market ("dry powder") and the fact that the number of available target companies has not increased, competition in transactions is intensifying and multiples are rising. For investors, this means either overpaying for a transaction today or not doing it. High liquidity in the market changes portfolio strategy When Siemens Audiology was sold to the financial investor EQT, the company achieved an EBITDA multiple of 14.8. This is well above the multiples that have been common in recent years. While multiples like the Siemens example are not uncommon today, they do raise the question of how such deals still generate returns. Classic measures aimed at revenue growth and financial leverage are unlikely to be sufficient in most cases. Operational performance is therefore necessarily gaining in importance, even if it is currently often neglected, particularly on the cost side, because it is easier to plan and initiate revenue enhancement measures "from outside". Cost and value creation structures, on the other hand, are usually very company-specific, which is why standardized outside-in approaches are not very effective. Expert knowledge is needed - not only about the industry, but especially about functional topics along the entire supply chain, i.e. production, logistics, purchasing, as well as cross-functional optimization topics in terms of business modeling, strategy and M&A, organizational and dimensioning topics. 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