CMF Survey of Middle-Market Private Equity Executives Finds a Pullback in 12-Month Projected Revenue Growth

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PE executives expect 0-5% organic revenue increases this year compared to 5-10% in fall of 2015

"While September's University of Michigan survey of consumer confidence indicated a 1.6% and 4.6% increase in month over month and year over year confidence, our survey results indicate that private equity investors are more cautious.

A survey of private equity executives at ACG’s M&A East Conference (September 27-28) by CMF Associates, a leading provider of financial, operational, and human capital solutions to private equity, middle-market, and small cap public companies, found a pullback in 12-month projected aggregate revenue growth in existing portfolios.

The fall 2016 results indicate an apex of 42.1% of respondents expecting between 0-5% organic revenue increases, compared to fall 2015 results, which found an apex of 67.7% of respondents expecting 5-10% organic revenue increases. In 2013 and 2014, more than 50% of respondents each year said they expected 5-10% growth, and more than a quarter of respondents in 2013 said they expected 10-15% growth in revenue.

Those surveyed also reported that purchase multiples in fall 2016 saw a slight pullback in peak purchase multiples from 7x to 6x, with 26% indicating 6x EBITDA and 29% indicating 7x EBITDA for 2016 and 2015, respectively. 26% of executives reported 9x+ EBITDA multiples, which likely indicates the disparity between platform and add-on investments.

"While September's University of Michigan survey of consumer confidence indicated a 1.6% and 4.6% increase in month over month and year over year confidence, respectively, our survey results indicate that private equity investors who are closer to the operations of middle market companies are more cautious about the next twelve months,” said Thomas Bonney, founder and managing director of CMF.

The survey of private equity executives was conducted on September 27 and 28 at the M&A East Conference in Philadelphia. This is the fifth installment of the survey by CMF, which also surveyed M&A East attendees in 2012, 2013, 2014 and 2015.

The three graphs attached detail CMF’s fall 2016 survey results versus results from the preceding three years.

About CMF Associates

CMF Associates, LLC, private equity’s preferred operating partner for finance and financial leadership, delivers transaction- and transition-focused financial, operational, and human capital solutions to private equity-backed portfolio companies. Headquartered in Philadelphia and with offices in Chicago, New York, and Vancouver, CMF’s offering includes interim CFO, COO, and controllership services; M&A advisory including pre-transaction due diligence, carve out services and post-transaction integration; full-time executive search; and deal sourcing. To learn more, visit http://www.cmfassociates.com.

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Contact
Dan Mahoney
CMF Associates, LLC
dmahoney(at)cmfassociates(dot)com
(215) 531-7493

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