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Stock impact report

Challenges Facing The Life Science Private Equity Space [Forbes]

Thermo Fisher Scientific Inc (TMO) 
Last thermo fisher scientific inc earnings: 4/22 06:00 am Check Earnings Report
Company Research Source: Forbes
The mathematical imperative for private equity is simple: Deliver roughly three times invested capital over a three- to five-year hold period. To do this, companies generally need to use three main drivers: 1. Topline growth 2. Margin expansion (or operational leverage) 3. Multiple expansion (the exit multiple/valuation multiple growing relative to entry) In many buyouts over the past decade, the multiple expansion leg has been an easy driver because public market valuation multiples steadily climbed. For example, the Shiller P/E ratio—which investors use to assess market valuations —has increased from around 25 in 2014 to almost 40 today , providing many companies with a valuation boost with little effort. The effect is even more pronounced when you consider that P/E ratios today are artificially lower because of the 2017 tax cuts, which dropped corporate tax rates from 35% to 21% . Lower taxes mean increased earnings, as more dollars drop to the bottom line and artificially Show less Read more
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