Brief analysis

Value creation for private equity

Why value creation is becoming increasingly important for private equity firms in the construction and infrastructure sector
Traditional private equity levers such as financing structures or multiple arbitrage are increasingly reaching their limits. In the construction and infrastructure sector, real operational value creation is crucial today. Here are the main reasons:

1. Market changes and limited growth through pure financial optimisation
 
  • Rising purchase prices: Many attractive assets in the construction and infrastructure sector are expensive. In order to still achieve attractive returns, private equity firms must actively contribute to value creation.
  • Falling multiples: When selling, companies often no longer achieve the high multiples they used to, which increases the pressure to generate operational added value.
 
2. Growing competition among investors
 
  • Focus on differentiation: In order to stand out from the competition, investors are specifically looking for ways to utilise the operational and strategic potential of their portfolio companies.
  • Expectations of limited partners: Investors increasingly expect detailed plans to increase value before providing capital.
 
3. Complexity of the construction and infrastructure sector
 
  • Project-based business: In construction and infrastructure, success is heavily dependent on projects, tenders and margins. Efficiency gains in execution, resource utilisation and the supply chain can be crucial.
  • Sustainability and ESG: The requirements for ESG criteria (e.g. CO₂ reduction) have increased enormously. A good ESG strategy can not only minimise regulatory risks, but also increase the company's value in the long term.
 
4. Active management of operational levers
 
  • Digitalisation and KPI management: The use of technologies such as BIM (Building Information Modelling) or AI can make projects more efficient and reduce costs. In addition, the implementation of a KPI-based management approach is key to recording and controlling the transparency of profitability levels at project level.
  • Cost management: Optimisation of procurement, material costs and labour utilisation are key levers.
  • Sustainable growth: In addition to traditional growth areas, business models must increasingly be geared towards recurring revenue (e.g. through service contracts) or long-term partnerships. An approach derived from the strategy with inorganic and organic initiatives should be adopted here.
 
5. Long-term trends in the construction and infrastructure sector

  • Urbanisation and climate change: These megatrends create enormous demand for new solutions, be it through energy-efficient construction or resilient infrastructure. Private equity can create added value here through targeted investments in innovation.
  • Regulatory pressure: Governments around the world are increasing requirements, which rewards efficiency and innovation in projects and makes good operational teams all the more important.
 
Conclusion: Operational value enhancement is the key to mitigating risks, securing competitive advantages and actively increasing the value of portfolio companies.
Above all, the realisation of genuine profitability transparency in the key value categories has a decisive influence on the multiple in the exit. In addition to the classic sales and EBITDA drivers, holistic KPI management is therefore essential.
 
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Christoph Blepp
Christoph BleppManaging Partner
Christoph Blepp is one of the leading strategy consultants in the construction and construction supply industry as well as in the infrastructure sector with extensive expertise in the areas of strategy development, value creation and corporate management. His focus is on achieving sustainable effects for companies and combining strategic initiatives with measurable results.
 
Through his analytical approach and deep understanding of industry-specific challenges, Christoph is able to develop customised solutions that drive both operational efficiency and strategic growth. His focus on holistic strategies, combined with his hands-on experience in managing complex business operations, makes him a sought-after partner for clients seeking sustainable success.
 
‘The transformation of the entire building construction, infrastructure and energy sector is leading to strong pressure for change and enables completely new approaches to strategy. Helping companies to create sustainable and superior business models is what drives me.’’

Patrick Seidler
Patrick SeidlerManaging Partner

Patrick Seidler is a recognised expert in the field of mergers & acquisitions (M&A) with a particular focus on the construction and infrastructure sector. For over 15 years, he has successfully advised companies on complex transactions, from corporate takeovers to strategic mergers. Thanks to his in-depth knowledge of the sector and his structured approach, he has successfully completed numerous national and international M&A projects.

Patrick is a close and trusted advisor to owner families and investors in the construction, construction supply and infrastructure sectors and is a regular author of studies, speaker and panellist at industry events on the topics of M&A and succession.

‘I am driven by constantly experiencing new and impressive life's work from owners and helping to shape professionalisation and consolidation along the entire value chain.’