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Insight into portfolio management - Private equity research management

The business model used by successful private equity houses in the 1990s may no longer be so effective in generating the best class of returns. KPMG and Manchester Business School conducted a survey, which finds that the traditional deal-making expertise may need to be supplemented, particularly in the mid-market, with additional portfolio management skills. This will enable private equity houses to add value more readily throughout the investment cycle. A useful overview for investors looking to understand current practice and the ways in which portfolio management can be developed and improved to maximise returns.

The main results of the survey found that, private equity houses recognise the importance of identifying and solving problems with portfolio companies but acknowledge that their reaction to issues is often too little too late. Intervention tends not to involve a heavy commitment on the part of the PE house and predominantly involves the replacement of under-performing management teams. Private equity houses often don't have the people with the right skills or resources to regularly respond more proactively on a regular basis.

Click here to view survey (pdf 152KB)

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