The PE industry has increased its focus on portfolio value creation in recent years, while still leveraging M&A. But in 2023, without market conditions to support robust dealmaking, PE portfolio performance will now be top of mind.
Cost reduction is key, but growth is an even higher priority in the coming months, according to our survey and our conversations with global PE executives.
PE firms with more sophisticated data analytics have the insights across their portfolios to identify growth opportunities during the downturn.1 They are considering long-term levers such as new business models, product and service offerings, and go-to-market approaches.
These moves will complement the more tactical performance improvement levers we expect to see used this year, such as noncore headcount reduction, vendor consolidation and contract renegotiation, facilities rationalization, and working capital optimization.
Among the value drivers are several emerging themes: