Purpose: The aim of this thesis is to provide evidence to what actions private
equity owners take to enhance its portfolio firm’s value creation. It also shines
light on how these actions are carried out, as well as the underlying reasons for
Research question: What actions are taken by private equity owners in order to
create value in their portfolio firms?
Theoretical framework: The theoretical framework for this thesis is based on
Kaplan & Strömberg’s (2009) categorization of actions actuated by the new
ownership into financial-, governance-, and operational engineering. This
theoretical platform will act as the foundation for the analysis of what changes
that follows a leveraged buyout and how they are connected to the portfolio firm’s
Research methodology: The thesis adopts a multiple case study design based
on a mixture of quantitative- and qualitative methods.
Conclusions: The thesis provide indications that the way private equity
ownership creates value for its portfolio firms has changed from being a result of
primarily financial engineering to being an outcome of governance- and
operational engineering. Even if there still is evidence of that financial
engineering is a requirement for the private equity firm, arguments can be made
that the value that is added by the leveraged buyout indirectly derives from
governance engineering and directly from operational engineering. The changes
with highest influence on value creation are improvements of the portfolio firm’s
capital efficiency and strategy.
2015. , 54 p.
Private equity, leveraged buyout, value creation, financial engineering, governance engineering, operational engineering