For McGladrey's 2012 Private Equity Survey, firms shared their priorities for driving value creation and spurring growth. The results show that firms focus on a variety of performance improvement initiatives, with a growing trend toward greater operational involvement at portfolio investments.
The majority of firms recognize the importance of generating daily, weekly and monthly performance metrics to drive and monitor improvement. But, deficiencies in portfolio company IT systems continue to be an issue. Firms are also reevaluating offshore production strategies in light of higher freight costs and supply chain risks. Survey responses indicate that more companies are returning production to the United States or moving it to closer low-cost countries.
The responses reveal that private equity firms are doing their part to spur economic growth. Nearly two-thirds of the responding private equity firms reported headcount increases at their portfolio companies post-acquisition—results that largely contradict the recent sentiment that private equity firms are job killers.
The survey findings and other supporting data indicate that private equity firms are playing a key role in helping the middle market sustain itself and grow in an economic climate that remains challenging and uncertain.