Ernst & Young study highlights long-term strengths of private equity
TORONTO, July 9 /CNW/ - Private equity-owned businesses around the world
excelled in 2007 and beat public company benchmarks for the third consecutive
year, Ernst & Young said today in a new study.
In How do private equity investors create value? Beyond the credit
crunch, Ernst & Young reports that the enterprise value (EV) growth of private
equity-owned businesses fared better than that of public companies, despite
tightening credit conditions. The global study looked at the world's 100
largest private equity exits in 2007, including 44 in Canada and the United
"Private equity continued to be successful in 2007," said Joe Telebar,
transactions advisory services partner at Ernst & Young in Toronto. "Our
findings show private equity is creating real, sustainable value with its
In 2007, the annual EV growth rate for the 100 largest global private
equity exits was 24% - double the EV growth rate of public company
counterparts. This applied to exits of all sizes within the study sample,
including the mega-deals.
Private equity exits also outperformed the public company benchmark
across all major industry sectors and in virtually every market around the
globe, with 2007 exits growing EBITDA 33% faster than their public
Private equity's proven ability to outperform public companies on key
metrics despite the challenges plaguing global markets is a good sign for the
future, Telebar noted. "Private equity investors have really shown they can
deliver profits, value and investment returns. We'll likely see exit volumes
contract somewhat, but when the market recovers, private equity firms will be
well-positioned with thriving businesses ripe for exit."
In particular, Telebar highlighted middle-market deals as promising
private equity opportunities for the months ahead. "The smaller deals showed
the strongest growth in EV. It will be interesting to see where this trend
goes, as middle-market deals will likely be comparatively easier to finance."
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and
advisory services. Worldwide, our 130,000 people are united by our shared
values and an unwavering commitment to quality. We make a difference by
helping our people, our clients and our wider communities achieve potential.
For more information please visit ey.com/ca.
For further information:
For further information: To receive a copy of this year's study or to
speak to a spokesperson, please contact: Amanda Olliver,
email@example.com, (416) 943-7121; Julie Fournier,
firstname.lastname@example.org, (514) 874-4308