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.
