Value creation in private equity backed companies: European evidence over the last private equity boom

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.author Remes, Markus
dc.date.accessioned 2013-12-02T09:16:26Z
dc.date.available 2013-12-02T09:16:26Z
dc.date.issued 2013
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/11727
dc.description.abstract I examine deal-level data on 135 private equity transactions completed in Europe during the period from 2003 to 2012. By deploying a proprietary dataset combining cash flow data exchanged between a prominent limited partner and private equity funds with deal-level data the thesis assesses the determinants of value creation in the period over and after the leverage buyout boom. The evidence suggests that sales growth and margin improvements over the holding period have been significant positive drivers of the equity returns in 2003-2012, while no evidence for leverage effects over the same period is found. The thesis focuses on applied means of value creation during the holding period without controlling for pre-transaction performance. Therefore based on the provided evidence limited partners can be encouraged to focus on PE funds that are able to generate operational improvements in their portfolio companies. Moreover, the evidence suggests that entry transaction type has a significant effect on the realised returns, namely corporate spin-offs have significantly outperformed other entry transaction types for the full sample. Weak evidence for negative association between holding period and equity returns is found for post-recession sub-sample. Furthermore, assessment of transactions exited in the pre- and post-recession periods reveals that explanatory variables have statistically significant explanatory power only for post-recession sub-sample indicating that different means for value creation may function and be applied in different economic cycles. While providing new recent evidence on the different means of value creation in European private equity transactions the thesis also addresses the large variance in the scope and way of reporting to limited partners by the PE funds. Given the highly significant evidence on the importance of some value drivers over others, limited partners and other stakeholders are encouraged to enhance the level and scope of PE fund reporting as well as make it more uniform in order to enable more reliable and efficient performance measurement across transactions undertaken by different PE funds to ultimately generate efficient performance measures that support re-investment decisions. en
dc.format.extent 82
dc.language.iso en en
dc.title Value creation in private equity backed companies: European evidence over the last private equity boom en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Business en
dc.contributor.department Department of Finance en
dc.contributor.department Rahoituksen laitos fi
dc.subject.keyword Private equity
dc.subject.keyword leveraged buyouts
dc.subject.keyword transaction type
dc.subject.keyword holding period
dc.subject.keyword fund reporting
dc.identifier.urn URN:NBN:fi:aalto-201312058044
dc.type.dcmitype text en
dc.programme.major Finance en
dc.programme.major Rahoitus fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon sijoitukset
dc.subject.helecon investments
dc.subject.helecon pääoma
dc.subject.helecon capital
dc.subject.helecon tuotto
dc.subject.helecon rate of return
dc.subject.helecon yrityskaupat
dc.subject.helecon corporate acquisitions
dc.subject.helecon aika
dc.subject.helecon time
dc.subject.helecon raportit
dc.subject.helecon reports
dc.subject.helecon sijoitusrahastot
dc.subject.helecon investment funds
dc.ethesisid 13360
dc.date.dateaccepted 2013-09-19
dc.location P1 I


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