Value Creation in Buyouts: Value-enhancement practices of private equity firms with a hands-on approach

Private equity firms have demonstrated a historical success in the buyout industry. However, current trends in the industry such as institutional changes, phenomenon of capital overhang and an influx of new entrants have intensified competition among buyout firms. To maintain the expected high gains, private equity firms must actively create values for their portfolio companies. The purpose of this study is to describe and analyze how private equity firms with a hands-on approach add value to the companies under management.A literature review on value-creation by private equity firms was conducted. The value creation methods were classified by the authors under the four themes: governance engineering, financial engineering, operational engineering, and strategic redirections….


1 Introduction
1.1 Background
1.2 Problem Discussion
1.3 Purpose
1.4 Delimitations
2 Research Design
2.1 Methodology
2.2 Research Approach
2.3 Literature Review
3 Theoretical Framework
3.1 Governance Engineering
3.2 Financial Engineering
3.3 Operational Engineering
3.4 Strategic Redirection
3.5 Summary of Value-Creation Methods
4 Method
4.1 Company Selection
4.2 Data Collection
4.3 Data presentation and analysis
4.4 Method evaluation
5 Empirical Findings
5.1 Private Equity A
5.2 Private Equity B
5.3 Private Equity C
5.4 Private Equity D
5.5 Private Equity E
6 Analysis
6.1 Target companies and Investment criteria
6.2 Governance Engineering
6.3 Financial Engineering
6.4 Operational Engineering
6.5 Strategic Redrection
6.6 Timeframe
7 Conclusions
7.1 Reflections on the Study
7.2 Further Research
Appendix 1 – Interview questions

Author: Bengtsson, Patrik,Nagel, Ron,Nguyen, An

Source: Jönköping University

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