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Bailey McCann, Opalesque New York: Private equity fund managers and portfolio company chief financial officers are beginning to show signs of cautious optimism according to new data from BDO on the state of private equity.
Findings from BDO's 2024 Private Equity Portfolio Company CFO Outlook Survey show that portfolio companies have been able to improve their financial situations over the past year, but still struggle with cash flow as interest rates remain high.
According to the survey, "in 2023, portco CFOs looked to right-size their financial
situations, and many were successful - far fewer CFOs
reported decreases in revenue and profitability. As noted
in BDO's 2023 Private Capital Survey, fund managers
and operating partners prioritized capital structure
management saying equity relief (which includes
recapitalizations) was their top capital deployment
channel in 2023. Portcos benefitted from this strategy,
using the cash infusions to bolster their balance sheets,
which enabled them to pay down debt and stabilize their
cash flows, revenues, and profitability."
Only 3% of CFO survey respondents expect a decrease in revenue, down from 16% last year. 8% expect a decrease in profitability over the next 12 months, compared to 27% last year.
Private equity managers and CFOs note in the survey that even though rates remain high and there are still economic headwinds, there is greater clarity on the cost of capital going forward as it is unlikely t...................... To view our full article Click here
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