French private equity-backed companies generally still healthy

According to a survey of private equity-backed companies conducted by Opinion-way in association with the AFIC, the majority of French LBO-acquired firms are currently able to manage their debt commitments and covenants.

The survey, which included a cross-section of around 25% of all French LBO-acquired companies, found that 80% of them were able to honour their debt engagements while only 20% where unable to respect their covenants. Of these, a 4/5 majority had, however, entered negotiations with their creditors and had found a suitable solution to their difficulties. This leaves only 4% of private equity-backed companies currently struggling to negotiate and manage their debt. There are around 1,500 leveraged private equity backed companies in France, so taking the survey's results as a representative example puts the number in difficulty at around 70.

The findings show a strong resilience in the French market which can be put down to responsible action between private equity houses and banks, highlighting a desire to reach agreements with creditors in difficult times. However, while these figures allow for a degree of optimism, it can not be forgotten that we are still in a tough economic climate and many complications may still lie ahead for these companies.

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