Measure the equity return impact of fixed-cost ESG initiatives and their influence on portfolio company valuation.
Private equity value creation models used by GPs and LPs, and even academic and industry researchers, usually fail to capture how debt amplifies equity gains and losses. Fortunately, a broken value bridge can be fixed quite easily…
If you plan to use private equity value creation models to understand the sources of Fund or GP returns, you should always include a value driver that accounts for equity dilution and concentration.
How to handle and investment with more than one equity infusion, distribution, add-on acquisition, divestment, refinancing, or dividend recapitalization.
Adjust exit metrics for the divestment of operating entities that make incremental changes to the company’s effective balance sheet and P&L.
Adjust entry metrics for the acquisition of operating entities that make incremental changes to the company’s effective balance sheet and P&L.
How private equity GPs tend to shift value creation from categories like Revenue Growth and EBITDA Growth into Multiple Expansion.
Simple market and manager-driven return measurements that can be more meaningful and easier to calculate than PME.
Suggestions for building effective market valuation multiple datasets.
Separate the market and manager-driven factors behind valuation to calculate Market Multiple Expansion and Intrinsic Multiple Expansion.