Methodology and Research Design

Abstract

The purpose of the proposed study is to provide practitioners in the Private Equity industry and academia with a better understanding of the value creation process in buyout transactions. Especially, this study seeks to shed light on the drivers that lead to such successful buyout transactions and in turn to the observed “abnormal” performance in LBO funds when compared to either similar acquisitions performed by strategic buyers or to public equity market performance. More specificly, the thesis shall focus on factors influencing performance and contributing to value creation from three major sources:

• 1) The contribution of exogenous, systematic drivers of value creation, which are (i) related to general market conditions, (ii) related to the financial performance of the target or its industry or (ii) related to the type of acquisition undertaken (together the “financial” impact on performance).

• 2) The contribution of indigenous, non-systematic drivers of value creation, which can be attributed to the following two areas: a)The characteristics and resulting managerial approach of buyout investment manager profiles as well as buyout firm profiles (the “managerial” impact on performance) b)The acquisition management approach and strategic drivers specific to each single LBO transaction (the “strategic” or “operational” impact on performance)