Morgan Stanley IM: Hands-On Operational Improvement Key to Creating Alpha in the Middle Market
A successful approach to operational value creation has been key to driving successful private equity outcomes over the last decade.05.11.2024 | 07:35 Uhr
It is increasingly important as we adjust to an environment of higher interest rates and inflation, lower levels of financial leverage, and uncertain macroeconomic growth.
Key Features
- ‘Buy and Hold’ is no longer a viable strategy in the current macro environment.
- Hands-on portfolio operations is critical to driving profitability and equity value creation.
- Alignment and integration of investment and operating teams is key throughout the investment lifecycle.
- A deep and broad team of operating resources is essential to driving real change in the portfolio.
Differentiation is critical in a dynamic private equity
landscape
The middle-market private equity landscape has evolved significantly in the
past decade. Investable dry powder has set new records each year from 2010
to 2023 and the sponsor universe has seen a significant volume of new
entrants. An increasing number of investors, a larger pool of capital that
needs to be deployed, and a fixed supply of top-quality companies have combined
to drive up asset values, and in turn placed an ever-greater importance on the
ability to drive true alpha.