Tuesday, June 2, 2020

PE-backed businesses deliver in the growth stakes

Private equity (PE) investment has boosted revenues in Midlands businesses by 44% in the last five years, according to research by accountancy and business advisory firm BDO.

The 169 PE-backed firms in the region analysed by BDO have generated close to an additional £1bn in revenues since 2013, representing a 44% increase in turnover from £2.15bn to nearly £3.1bn.

These businesses employed an additional 14,886 people over the same five-year period, increasing employment levels by 67%.

Andrew Mair, partner and head of private equity at BDO in the Midlands, says: “The figures tell the story. Businesses that have the backing of private equity investors are driving growth and creating jobs against a backdrop of uncertainty and the UK economy would be poorer without them.”

He added: “Private equity can bring with it some preconceptions, but the idea that private equity are asset strippers is outdated. This research shows that for well-run, fast-growth businesses, it provides access to capital and expertise to help accelerate growth and opportunity.”

This latest research comes just over six months after the publication of BDO’s Midlands Private Equity Growth Barometer, which found the appetite for private equity investment in the Midlands had increased, with the number of PE-backed deals increasing 28% in the last two years. Despite being home to around 169 PE-backed businesses, with more than 90 different PE houses having investments in the region, the Midlands was still found to be lagging behind other parts of the UK, with only one PE-backed company for every 3,570 businesses. This compares to one for every 1,761 businesses in London and 2,682 in Scotland. The 2019 report will be published later this year.

Rory Dennis, assistant director in the East Midlands M&A team added: “As a firm, PE-backed businesses form an important part of what we describe as the UK’s ‘economic engine’ – fast-growth, entrepreneurially-spirited, mid-sized businesses that are driving growth in the UK. This research highlights why these businesses need greater recognition and support as they continue to show resilience against political and economic pressures.”

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