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PE-backed businesses soar in growth stakes

26 April 2019

  • Private equity investment boosts business revenues by 53% and sees employment rise 43% in the last five years
  • BDO says the misconception that private equity firms are asset strippers is “long out of date”

Private equity (PE) investment has boosted revenues in UK businesses by more than 50% in the last five years, according to research by accountancy and business advisory firm BDO.

The 2,000 PE-backed firms in the UK analysed by BDO have generated an additional £17bn in revenues since 2013, representing a 53% increase in turnover from £30.7bn to £47.1bn.

PE investment has also bolstered the UK labour market, with each PE-backed businesses creating on average between five to ten new jobs a year.

The businesses analysed employed an additional 10,000 people in 2018. Over a five year period, they increased employment levels by 43% creating an additional 86,500 jobs in the UK.

Jamie Austin, head of private equity at BDO, says: “The figures speak for themselves. Businesses that have the backing of private equity investors are driving growth and creating jobs against a backdrop of uncertainty and the UK economy would suffer without them.”

Austin says the results provide further evidence that the view held by some that private equity investors are ‘asset strippers’ is long out of date.

“In its simplest form, private equity serves two purposes,” he explains.

“For well-run, fast-growth businesses it provides access to capital and expertise to help accelerate growth and opportunity.

“For other companies, which are struggling to reach their potential, it can act as a catalyst for change, providing support and focus to help develop new growth strategies.”

BDO says PE-backed businesses form part of what it describes as the UK’s ‘economic engine’ – fast-growth, entrepreneurially-spirited, mid-sized businesses that are driving growth in the UK.

It believes they are overlooked and undervalued, and need greater recognition and support as the country prepares for Brexit.

“These businesses are the squeezed middle of the business world,” says Austin. “They are too big to benefit from the raft of policies aimed at start-ups yet too small to have the ear of policymakers like big corporations.

“While successive governments have worked hard to create a business-friendly environment in the UK, there is always more that can be done. Fast-growth businesses are the backbone of our economy and should be front and centre of the Government’s post-Brexit thinking.”

ENDS

Note to editors 

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy. 

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed. 

BDO LLP

BDO LLP operates in 17 locations across the UK, employing nearly 5,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has underlying revenues of £590m and is the UK member firm of the BDO international network.

BDO’s global network

The BDO global network provides business advisory services in 162 countries, with 80,000 people working out of 1,600 offices worldwide. It has revenues of $9bn. 

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