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Revenue Growth is 54% of Exit Value. Is Yours Exit-Ready?
Revenue Growth is 54% of Exit Value. Is Yours Exit-Ready?
Part 2 of our exit readiness series. If you missed Part 1, start here: The Exit Readiness Gap: What PE Buyers See That You Don't.
According to Gain's The Private Equity Value Creation Report: 2025, revenue growth is the largest driver of PE value creation, contributing on average 54% of the total. Margin expansion accounts for 14%. Multiple expansion adds another 32%, but here's what that number obscures: multiple expansion is itself largely driven by revenue growth. Fast-growing companies typically command 30 to 50% higher exit multiples than slower-growing peers. Growth doesn't just add value directly. It amplifies every other value driver in the equation.
Hey GP, Where’s Your Digital Transformation?
May 14, 2020, 3:00:00 PM — “Digital transformation” is a phrase we hear and read about constantly. It’s in countless articles and thought leadership pieces targeted at marketers, CEOs, investors, and other business leaders. It’s a topic that’s brought up in almost every meeting we have with private equity firms as well as at most PE-focused events. It gets used so much that it has become one of those omnipresent buzzwords in danger of losing its meaning, like “Big Data” and “The Cloud”.
Private Equity Portfolio Triage During COVID-19 – Are Investors Missing Something Big?
May 4, 2020, 11:38:28 AM — By now, most if not all Private equity firms have done some level of triage on their portfolios as a result of the COVID-19 pandemic. As expected, much of the focus has been on determining which companies are at most risk financially and operationally, and steps have been taken to shore up liquidity and protect supply chains among other things. However, scant attention has been spent on assessing the ability of holdings across the portfolio to restart commercial engines post crisis. This shortcoming jeopardizes the ability to take advantage of what may be transformative growth opportunities in my opinion. It also puts overall fund performance at risk in the long-term.