New Survey: Half Of Private Equity Executives Focus On Operational Improvements Before Signing Letter Of Intent


Apr 29, 2014, 09:14 ET from TheStreet, Inc.

NEW YORK, April 29, 2014 /PRNewswire/ -- Today, The Deal, TheStreet's (NASDAQ: TST) institutional business, and Pepper Hamilton LLP released a special report, Strengthening Companies: Operational Improvement Trends, outlining the findings from a new survey of private equity executives. The survey demonstrated the importance of operational improvement and the thought that private equity firms put into the process.

"Our survey results reveal some of the thinking that goes on in the middle market private equity space, looking at everything from when and how operational improvements are considered to how employees impact these changes," said Jeffrey Kanige, Editor in Chief of The Deal.  "What was most interesting to hear was feedback about private equity thinking pre- and post-crisis. Those tough financial times are undoubtedly playing a major role in decision-making today."

Survey highlights include:

  • 48.4% of those surveyed said they begin focusing on operational improvements before signing a letter of intent while only 11.6% said they begin after reaching a definitive agreement and 11.6% said they do so after closing.
  • Asked how they plan for operational improvements after closing, 47.5% said they use a 100-day program, while just 16.8% said they use a three- to five-year plan.
  • Nearly 80% of respondents said they believe operational improvements are more important now than it was before the financial crisis.
  • Respondents agreed that former CEOs and senior executives are most effective at identifying problematic operational issues at every stage: during due diligence, after a definitive agreement and after one year.
  • The survey also revealed wide agreement that sales execution has been the most important operational improvement to their investment thesis. Healthcare cost improvement was seen as the least important issue.

"In an environment where middle-market private equity firms are holding onto portfolio companies longer, it is of strategic importance to the funds to focus on operational improvements within these companies to create value and returns," added Bruce K. Fenton, partner and chair of the Private Equity Practice Group and Investment Funds Industry Group for Pepper Hamilton LLP.  "We are seeing many of these issues with our private equity clients around the country and it is helpful to be able to share these insights of senior private equity professionals."

The full report is available online.

About the Survey The survey was fielded electronically via private invitation to senior private equity executives from The Deal's proprietary database during February and March 2014. 120 private equity professionals with an operational focus participated, sharing insights on size of funds being invested; industries and geographies where they invest; at what point in their process they turn the focus to operational improvements; what operational areas of the business they most closely examine; and how often the results of their operational improvement strategies matched their initial assumptions.

About The Deal The Deal, a business unit of TheStreet, has been serving corporate dealmakers, advisers and institutional investors the most sophisticated analysis of the deal economy since 1999. Our transaction information service, The Deal Pipeline, is powered by a newsroom of senior journalists who offer proprietary research and reporting across M&A, bankruptcies, auctions and financings. It includes a breaking news service, First Take; daily and weekly sector newsletters; The Daily Deal, a 2x daily report of the day's top stories; a research center with over a decade's worth of intelligence and a database of over 100,000 deals; and an iPad & iPhone app. Our marketing & media services group produces the industry's leading forecasting event, The Deal Economy, held annually in New York City in addition to industry webcasts and integrated marketing programs. For more information, visit

About Pepper Hamilton LLP Pepper Hamilton LLP  is a multi-practice law firm with more than 500 lawyers nationally.  The firm provides corporate, litigation and regulatory legal services to leading businesses, governmental entities, nonprofit organizations and individuals throughout the nation and the world.  The firm was founded in 1890. For more information, visit

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SOURCE TheStreet, Inc.