KPMG survey highlights importance of management expertise in buyouts

KPMG and Directorbank surveyed entrepreneurs with current or previous experience of private equity ownership. The responses showed that the management of portfolio companies are looking for management expertise in their private equity partners. Compatibility with the management, strategic vision and financial acumen were ranked as the three most desirable qualities of the private equity backers. 

While almost 80% of participants agreed that private equity players were involved in the business to an appropriate degree, some considered private equity a hands-off business that takes place in the background. Others thought private equity managers had to face the challenge of translating strategic ideas into management.

More worryingly, 41% rated the quality of private equity input over the holding period as average or poor.

Knowledge of the industry or segment ranked relatively low, as opposed to experience with similar deal structures, suggesting that portfolio companies look for managerial guidance in a buyer. However, the highest bidding price and certainty of completion of the transaction were still named as the top two reasons for private equity to win a deal.

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