Private Equity Performance Improvement Managing Director, Markus Lahrkamp, recently authored article on PE Hub, “Beware: Cracks Appearing on the Deal Front.” Is stress, or even distress, inevitable for portfolios? In the article, he discusses what to look for – and how to change course before it’s too late. 

In a well-oiled private equity deal, things usually follow this proven pattern” acquire a company, put on debt leverage, work with management on a performance improvement plan, grow the top line, and sell the company for much more than the original acquisition price. 
 
The formula works well…until events significantly alter business conditions. 
 
I believe we’re approaching such a turning point now. It’s one that’s likely to challenge the lofty expectations of PE owners and result in increasing stress – maybe even distress - within PE portfolios. Without some rapid course corrections, companies are destined to struggle in the months ahead. 

Read the full article here