Ernst and Young has released a new paper suggesting consumer product (CP) companies should form partnerships with private equity (PE) houses to survive the credit crunch.
The firm, in its paper entitled 'The best of both worlds: why every CP company should have a PE strategy', says that CP companies are becoming more open to collaborations with PE as they see the
assurances in a partnership to increase the range of strategic and operational options available to them.
CP appeals to PE as the sector tends to be asset intensive complete with large real-estate portfolios, which accounts for up to 20 per cent of GDP worldwide.
David Young, leader in the consumer products practise at Ernst and Young, said: "By learning from and harnessing PE's distinctive value generating capabilities to their own complementary brand building and marketing insights, CP companies may be able to do existing processes significantly better and faster, and access innovation that they couldn't do alone."
In other news, research by the Cass Business School, published in the Independent, says that PE-backed companies in the UK tend to outperform other initial public offering by almost ten per cent a year after coming to the market.
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