Nordic large-cap buyouts : Nordic private equity large-cap buyouts portfolio companies’ performance effect on close competitors and industry performance

Abstract

The thesis will analyze the Nordic private equity Large Buyouts portfolio companies’ performance effect on Close Competitors and industry performance in the timeline 1997-2016. 116 Large Buyouts will be the foundation of this analysis provided by Argentum Asset Management. The research explores how the industry has developed in Sweden, Denmark, Norway and Finland. Only 33 Large Buyout have exited so far. This paper defines Large Buyouts in the range of around EUR 337 million - EUR 12,300 million, which includes the range of upper mid-market buyouts and mega-cap buyouts. The deals have an enormous impact which often results in appraisal by stakeholders involved, or sparks political debates impacting the future of the private equity industry in the Nordic markets. The performance measurements are analyzed using the difference-in-difference methodology looking at changes in mean values from the Large Buyouts investment years. (1) Operating Performance, (2) Liquidity and Leverage, and (3) Employees, Wages and R&D are analyzed for Large Buyouts compared to Close Competitors. Sectors such as Energy, Health Care & Life Science, Industrials, Consumer, ICT, or Multiple Sectors, will also be analyzed compared to Close Competitors. The analysis results are consistent with most academic literature implying that Large Buyouts perform better compared to Close Competitors, or other control groups. This is seen in (1) Operating Performance and (3) Wages, Employees and R&D. In contrast, Close Competitors have better (2) Liquidity and Leverage performance compared to Large Buyouts. The findings also suggest that Large Buyouts improve in performance and have spillover effects on Close Competitors on some measurements. The (1) Operational Performance efficiency is mainly better for the respective industries in the Energy Sector, Health Care & Life Science Sector, Industrials Sector and Multiple Sectors. On the other hand, Close Competitors have better (2) Liquidity and Leverage performance and (3) Wages, Employees and R&D performance. The results show that the respective industries and Close Competitors are experiencing an increase or decrease in value triggered by the Large Buyouts in the Nordic markets, but at different performance measurements. In summary, this thesis provides results suggesting that their Large Buyouts creates spillover effects on Close Competitors and industry sectors performance.