德安华：2025创造价值归因白皮书：去杠杆化何去何从？海外利率上升对私募股权价值创造的影响（英文版）（12页）.pdf

1、Created Value Attribution WhitepaperWhither Deleveraging?Until recently,private equity(PE)investors have greatly benefited from historically low interest rates.Throughout 2022 and 2023,interest rates rose significantly.This new interest rate environment results in major impacts on value creation for

2、 PE investments.There is a three-fold impact in the new interest rate environment.First,debt capacity is reduced,which reduces the magnitude of potential leveraged returns.Second,more of each debt payment during the expected holding period goes to interest expense and less to debt paydown.Finally,hi

3、gher interest rates result in a higher cost of debt.In turn,ceteris paribus,there is an increase in the required rate of return on investments(i.e.,the industry weighted-average cost of capital WACC).Assuming no changes in growth profile and/or risk profile,increases in the WACC should result in a d

4、ecrease in valuation multiples and,assuming no increase in EBITDA,portfolio company values.Entering in a low-interest environment and exiting in a high-interest environment would result in the greatest negative impact on value creation.We have observed in our created value attribution(CVA)studies th

5、at the greatest negative impacts attributable to capital markets(beta)occur in such situations.The good news is that lower multiples would also impact entry costs for investments in the new high-interest-rate environment.To underscore the potential impact on value creation of investing and exiting i

6、n the current interest-rate environment,the following thought experiment provides a quantitative illustration of the impact of current higher interest rates on value creation compared with those of the low-interest-rate environment of the recent past.To assess this theoretical impact,we have utilize