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How do private equity investors create value? Taking stock A study of 2013 European exits

Author: EY
Date: September 2014

The gradual economic improvement in Europe, increasingly liquid debt markets and stronger IPO market conditions supported an increase in exit activity of PE-backed businesses in 2013, according to EY’s ninth annual European PE exits study published today. Last year saw 77 exits in the population covered by the study versus 61 in 2012.

  • 2014 shaping up to be a strong year for exits
  • PE outperformance is the most significant, and consistent, element of gross investment return over the past nine years – driven by faster profit growth versus comparable public companies
  • PE-backed IPOs bounced back in 2013

The report, Taking stock: how do private equity investors create value? A study of 2013 European exits, examines the outcomes and methods of exits from a consistent population of large, PE-owned European businesses, numbering 604 between 2005 and 2013.

It showcases the return of exits via IPO in 2013 to a level not seen since 2006. Thirteen companies floated last year compared to just three in 2012, with several of PE’s best portfolio companies yet to hit the market.

Improved debt markets allowed secondary buyouts to recover. Last year, 55% of exits by number were to other PE firms’ companies — a notable uptick from the 38% recorded in 2012 and the highest share of exits since 2007, highlighting increased confidence. The rate of creditor exits fell to its lowest since before the crisis. When corporate buyers return, after yet another year of lackluster volume that has persisted since the downturn, all three key exit routes will be at healthy levels of activity.

Geography: Europe

Type of study: Consulting research

Relevant for: LP, GP All, Fund of funds, Associate

Source: EY

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