Analyzing the business performance of PE-backed and independently held assets based on data from over 15,400 companies in Europe
Welcome to the Private Equity vs. Independently Held report. In this report, we study over 15,400 businesses and 3,400 deals in Europe to compare the business performance of majority PE-backed assets with independently held businesses (also known as family-owned or privately-owned). Four insights stand out in our research.
- Assets owned by PE outperform those independently held. On average, majority PE-backed assets grow their revenue ~3-5% faster per year, with EBITDA margins being 3-5% higher as well. Both CAPEX and FTE growth rates are higher for PE-backed businesses too.
- PE-backed businesses do more M&A which boosts overall growth rates and margins. 48% of PE-backed businesses carry out add-on acquisitions, while only 27% of independently held businesses do so. M&A boosts overall growth rate by 2-3x for the acquirers.
- PE-backed investments are tilted more towards TMT and Services. PE firms overweight sectors that are high growth, resilient and have plenty of M&A opportunities. They underweight Industrials and Consumer compared to the wider independently held asset pool.
- PE firms acquire best-in-class independently held businesses. PE firms acquire businesses that grow at least 2x faster than the wider independently held asset pool. These businesses also have higher margins and higher growth rates compared to their portfolio holdings. Waterland, Carlyle, H.I.G. Capital and Oaktree Capital rank as the leading buyers of independently held businesses.