Challenge of Measuring Organic Deleveraging in Created Value Attribution Analysis

Created value attribution analysis addresses the critical question of how value is created and can ultimately assist Limited Partners in the identification and selection of General Partners who have demonstrated the ability to provide sustainable value-add through “building better businesses.” Unfortunately, the historical approach to value attribution is limited by its sole considerations of changes in EBITDA, market multiples and net debt, providing a very opaque view of how value is created. It does not address enterprise performance relative to the respective industry nor the distinction between organic value creation and acquired value, two critical factors necessary to reveal true value creation.