According to the UK’s fifth-largest accountancy firm, the idea that private equity firms are asset-strippers is long out of date.
Its analysis of 2,000 UK businesses backed by private equity, found that they generated an additional £17bn in revenues – a 53% increase in turnover since 2013.
PE investment has also bolstered employment in the UK. BDO found that each PE-backed business created on average between five and 10 jobs a year, with the businesses it researched employing an extra 10,000 people over 2018.
Since 2013, the businesses have increased employment levels by 43%, meaning an extra 86,500 jobs in the UK.
BDO says that the research offers evidence that PE investment forms part of the UK’s “economic engine”: fast-growth, mid-size businesses.
“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,” said Jamie Austin, head of PE at BDO.
“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," Austin added.
BDO argues that in the face of the changes Brexit might bring, these companies need more support and greater recognition.
“These businesses are the squeezed middle of the business world,” Austin said.
“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.
“Fast-growth businesses are the backbone of our economy and should be front and centre of the government’s post-Brexit thinking.”