Safeguarding buyout-investment IRR levels through operational change

financial engineering

The prime levers for achieving the above-market (30% and more) internal rates of returns (IRR) against which hedge fund and private equity firms are benchmarked have evolved.

In the past, investing was mostly a play of multiples, combined with strong leverage of the balance sheet. Investors enforced only 'low-hanging-fruit' performance improvements to impact EBITDA, while separating high-value assets from lower-value ones. Basically, high levels of leverage ensured a great internal rate of re