Private Equity Backed Companies Outperform Equally Levered Counterparts in Recession

An article published by the Harvard Business Review cited a study that private equity backed companies outperform equally levered businesses that did not have a private equity sponsor. The primary reason relates to access to capital. As liquidity drys up in a recession, companies with lots of debt struggle if their owners cannot tap capital markets at the appropriate time.

The takeaway is to always have multiple sources of capital available (and to maintain a sensible amount of debt, of course).

overleveraged private equity
Source: Walter Frick | "How to Survive a Recession and Thrive Afterward" | Harvard Business Review | 05/01/2019 | Visit