Purchase price multiple

Why Valuations Matter (Fifth of a Series)

“Only those who will risk going too far can possibly find out how far one can go.” –T.S. Eliot So far in our special series on valuations we’ve reviewed key variables that impact equity valuations, and the strategies private equity has used to address them. We’ve also shared sponsors’ perspectives on challenges of higher purchase

Why Valuations Matter (Fourth of a Series)

“Doubt is not a pleasant condition, but certainty is absurd.” –Voltaire The story of value is the story of private equity. How these firms have grown businesses and sold them for superior shareholder returns is about value creation. The paths to creating value and achieving these returns differ for each sponsor. As we discussed last

Why Valuations Matter (Third of a Series)

“The value of a thing sometimes lies not in what one attains with it, but in what one pays for it – what it costs us.” – Friedrich Nietzsche In last week’s installment of our continuing special series, we discussed how critical time is to driving value. This week we take a deeper look at

Why Valuations Matter (Second of a Series)

“Time is the longest distance between two places.” – Tennessee Williams One of the most important variables impacting valuations is how much time sponsors have to effect strategies to improve company performance. According to Preqin, the hold period for private equity GPs worldwide was 4.5 years last year – down from 5.9 in 2014. The

Why Valuations Matter (First of a Series)

“Anything that just costs money is cheap.” – John Steinbeck At the PartnerConnect conference in Boston last week, three panelists (including your correspondent) held forth on trends in middle market sponsor finance. One audience question caught our attention: “Given the current market, does the level of valuations concern you?” Of course, it depends what side