Private equity in Finland : an assessment of value creation and drivers for buyout activity
Master thesis
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http://hdl.handle.net/11250/2432386Utgivelsesdato
2016Metadata
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- Master Thesis [4490]
Sammendrag
Studying over 80 buyouts from 1999-2015 in Finland, we analyse companies subject to a
buyout before and after acquisition, relative to a carefully constructed benchmark. Both groups
are analysed across four dimensions: A) Operating performance, B) Insolvency risk, C)
Employment and D) Total Factor Productivity (TFP). Firstly, private equity investors do not
appear to select companies that grow faster than benchmark, but rather companies with an
efficient asset base. We proceed to prove that portfolio companies achieve significantly higher
growth in turnover after acquisition. Secondly, financially healthy companies appear more
likely to become subject to buyout activity, but private equity investors do not appear to utilize
the strong financial position by increasing debt levels subsequent to acquisition. Thirdly,
portfolio companies increase employment substantially more than benchmark in the three
years after acquisition, but seemingly at the expense of lower wage growth. Finally, Private
Equity investors appear to target efficient companies. However, the portfolio companies are
unable to sustain their competitive advantage after acquisition.