The buyout industry is facing up to a reality of lower investment returns that is forcing firms to place greater emphasis than before on preparing portfolio companies for exit by devising ways to boost their operational performance and corporate governance, according to industry experts.

Figures from data provider Preqin show that annualised net global internal rates of return for private equity firms hit 18.8% last year, a welcome rise from 13.8% in 2009, but markedly less than in the heady days of 2005 to 2007, when returns were between 26% and 29.1%.