Leverage Buyouts: – A boom or bust in the Nordic Region?

The private equity industry has been growing over the recent years and a large amount of capital is invested in Nordic private equity funds. Buyouts which are focusing on a leverage effect, known as the leverage buyout, have transformed public companies into private equity owned portfolio companies. However, the knowledge about the leverage buyout transaction in the Nordic region is limited in the academic world. The authors’ motivation when writing this master thesis has been the fact that the leverage buyout transaction is widely used in the Nordic market, but there has been a lack of discussions and research about the effects of the existing unstable financial markets. It has been a difficult time for the financial markets in the recent time period…


1 Introduction
1.1 Background
1.2 Problem Discussion
1.3 Purpose
1.4 Definitions
2 Research Design
2.1 Research Approach
2.2 Theory Selection
3 Frame of Reference
3.1 Private Equity
3.2 Buyout Strategies
3.3 The Leverage Buyout Process
3.3.1 Target Selection and Characteristics of the LBO candidate
3.3.2 Due Diligence and Deal Structure
3.3.3 Post Acquisition
3.3.4 Exit
3.4 Corporate Governance
3.4.1 Agency Theory
3.4.2 Agency Theory and LBO’s
3.4.3 Resource and Knowledge Transferring in LBO
3.5 Value Creation in Leverage Buyouts
3.5.1 Cost Reduction in Leverage Buyouts
3.5.2 The Debt Factor
3.5.3 The Tax Shield
3.5.4 Growth
3.5.5 Communication
3.6 Financial Performance Measure
3.7 External Factors Driving the LBO
4 Method
4.1 Research Method
4.2 Data Collection
4.3 Sample Selection
4.3.1 Interviews
4.4 Method Evaluation
5 Empirical Findings
5.1 LBO Market
5.2 LBO Targets
5.3 Fund Raising & Transaction Structure
5.4 The Time Perspective
5.5 Value Creation
5.6 Owner Structure
6 Analysis
6.1 LBO Market
6.2 LBO Target
6.3 Transaction Structure
6.4 Value Creation
6.4.1 Investment Time Period
6.4.2 The Tax Impact
6.5 Management and Owner Structure
7 Conclusion and Discussion
7.1 Reflections
7.2 Critique of Chosen Method
7.3 Further Research

Author: Fältmars, Håkan ,Arvidsson, Ola

Source: Jönköping University

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