"Over the past five years the Private Equity (PE) sector has been a source of spectacular returns, and a driving force of M&A activity across Europe and the USA, aided by abundant committed capital and favourable debt financing conditions (cheap credit, lite covenants). The 2008 crash in the debt markets marked the beginning of a new stage in the development cycle of the PE sector. With nearly one-trillion-dollars of uninvested capital, the PE firms will evolve into mature actors in the financial services industry. We predict that over the next decade a progressive trend of consolidation in fundraising ability and the increasing role of brand and scale will rationalise this highly fragmented sector, leading to 20-25 global firms accounting for some 80 percent of the worldwide allocated capital. With entry prices often already factoring in large part of the upside, post-acquisition value maximisation will become ever more success critical for PE firms. EBITDA growth (through a mix of business transformation, cost restructuring, and top line development) will be the crucial source of value creation for the fund, while multiple expansion and debt repayment will be less pivotal than in the past. The ability to seize value enhancement opportunities already in the due diligence stage will play an increasingly important role in closing a good deal in the first place. We anticipate that the winners will be those firms where, alongside the financial engineering talent, there is a sound adoption of the more traditional principles of corporate management (strategy, sector insight, skill base, organisation, governance, succession management), as well as a greater focus and active engagement on the strategy & operations of the portfolio companies. For Private Equity this is not the beginning of the end - but the end of the beginning."

Alfonso Marone, Practice leader - Tel +44 20 7630 1400.

Capitalizing on its experience in top management consultancy on business strategy, turnaround and change management projects, Value Partners can quickly deploy international specialist teams to assist private equity funds on a wide range of subjects. We provide a full-line advisory service, including market scouting, business due diligence, 100-day planning, and execution of value-based management projects. In the last two years we have carried out over 70 due diligences in Europe, Asia and the USA in Consumer goods & luxury, Media, Telecoms, and Manufacturing. Our post deal support has generated over $8bn of new shareholder value.