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PE firms: Squeeze out higher returns with better tech integration

June 29, 2021 Article 4 min read
Authors:
Dennis Bagley Craig Zampa

Private equity firms face a growing challenge: how best to squeeze out the value they need from deals. In Benzinga, Dennis Bagley and Craig Zampa explain why a greater focus on tech integration is the key to higher returns.

A modern office with modern furniture and furnishings.As M&A activity gets hotter, private equity firms face a growing challenge: how to squeeze out the value they need from deals.

North American deals hit their second-highest level this century in the first quarter of 2021, adding to sustained upward pressure on valuations. PE firms paid an average 13.2 times a company’s EBITDA for U.S. leveraged buyouts in 2020, an all-time high, up from 12.9 times in 2019.

PE buyers are increasingly turning to bolt-on acquisitions to grow companies inorganically, adding more pressure on them to find the operational efficiencies needed to deliver their required returns.

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