What are people at private equity firms doing all day now that so few deals getting done? Suduko? Facebook?
According to a white paper by auditors Grant Thornton and the Association for Corporate growth, a private equity industry group, people at PE firms are actually running and trying to improve the portfolio companies they own. Imagine.
The paper cites a survey done for ACG in which 42% of private equity firms responding said they were now spending 51 - 75% of their time on their portfolio companies. Thirteen percent of respondents said there were spending as much as 100% of their time dealing with the operations of their portfolio companies. ACG and Grant Thornton also asked firms if they were spending more or less time on portfolio companies this year than last. Sixty eight percent of firms said more. Only 5% said less.
ACG and Grant Thornton have surveyed private equity firms that do small to mid-sized deals for about ten years, but this year is the first they’ve asked firms how much time they were dedicating to operations. Harris Smith, Grant Thornton managing partner for private equity, says he’s sure, however, those as time goes on “those numbers can only go up.”