Operational Value Creation: The most important source of return for PE assets
Private equity (PE) markets in Australia have seen growing popularity and accessibility in recent years, both for retail and institutional investors. But just as exposure has grown, so have the near-term headwinds.
According to A&M calculations, a combination of multiples and margin compression could wipe over A$25 billion off the valuations of those PE assets acquired in Australia during the Covid-19 era deal boom. The impact of higher-for-longer rates on free cash flow and lower-for-longer (or more volatile and uncertainty) economic growth could drive even more value loss.
In this paper, we examine the state of the market in Australia and discuss how PE firms should reset their strategies.
This report contains significant contributions from Peter Zacherl, Manager, A&M Australia
