Hi all, does anyone have a concise view of what these two terms truly mean in a PE sense? My understanding is that a 'value' fund seeks targets they view are priced below the intrinsic value and thus generate value by bringing the company up to intrinsic value through EBITDA growth/multiple expansion. That is intuitive to me
But 'growth' means paying a premium multiple for a target that will grow EBITDA significantly by exit. But what generates value in a 'growth' strategy? If everyone knows a company is going to grow EBITDA by 20+% over next 5 years, the multiple paid will be extraordinarily high; while exit multiple will likely come down because growth will flatten. So where is the alpha/value coming from? All things held equal vs. a value strategy (from a leverage, deal structure pov) Thanks!!
