How private equity directors can work more effectively to create value

The “Working with Private Equity Portfolio Companies, “study by KPMG and Directorbank identifies strong operational expertise as a key differentiator between private equity firms.

KPMG and Directorbanksurveyed over 300 senior executives, non-executive directors and management at portfolio companies to identify which skills they valued most in their private equity backers. The study also included in-depth interviews with 20 of the participants, each of whom was a senior executive with experience working in several private equity-backed businesses.

The research showed that:

  • All participants credited private equity with adding value, with 40% estimating this contribution as more than 25% of the value uplift upon exit
  • Respondents were also asked to rate the quality of the private equity director’s involvement in the business, with 58% rating it as good or better and 18% as excellent
  • Those surveyed considered the better firms to contribute operationally either from within the firm or through operational partners and contacts
  • Respondents ranked the ways in which private equity contributed to value increase, as follows:

1.    Provision of capital to grow business

2.    Optimisation of business plan

3.    Removal of constraints on management

4.    Bringing in operational expertise


Participants consistently rated the input they got during the pre-deal and completion phases as well as on exit, but felt that private equity firms capable of providing operational support added the greatest value. Private equity executives are still drawn predominantly from financial, M&A and management consultancy backgrounds, but increasingly private equity firms recognise the need to bring in operational expertise.



Robert Ohrenstein, Global Head of Private Equity for KPMG, said: “The survey reveals that the better firms and PE Directors differentiate themselves in their ability to add real operational value. Whilst the research reveals that private equity directors are generally highly regarded for their deal making and financing skills, the best were seen to build relationships of trust with management and actively use their skills, knowledge and network of contacts."


Daniela Nemoianu, Executive Partner, KPMG in Romania, said: “The CEE and local markets show moderate optimism for 2013, with industries such as financial services, energy, retail and healthcare capturing investors’ interest.  Competitive strategies and efficiency tools remain strong differentiators, while the appetite for expansion cross border is increasing. PE houses active in Romania have a solid track record of successful investments and have actively contributed to the profitable business development of various sectors, even during the recent harsh conditions of the economic crisis.  Such key role, tailored to the actual challenges, will continue to make an impact on the general business trends and will send clear signals regarding the investment climate of Romania. It is of paramount importance for the Government to proactively foster direct foreign investments, promoting an integrated transformational strategy to focus on economic growth and competitiveness, underpinned by practical measures to speed up the large infrastructure and energy projects, reinvigorate EU funds absorption and plan the next financing period, cut the red tape, remove institutional inefficiency and eradicate corruption”.


About KPMG

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chisinau. We currently employ more than 650 partners and staff; Romanians and Moldovans as well as expatriates.