Empirical Part I — Market and Financial Value Drivers

Abstract

Part one of the empirical results in this study follows the first research question and first pillar of the chosen research model, focusing on the market and financial drivers that may impact value creation in buyouts. The chapter commences with a detailed descriptive overview of the universe of Private Equity funds, based on the Thomson Venture Economics (“VE”) dataset. The data presentation is important as a benchmark and control group population to put into perspective the primary buyout deal data set in subsequent sections.⁵⁶ The VE dataset focuses on the description of historical Private Equity, Venture Capital and Buyout fund investment and (fund as well as proxy deal) return trends mainly between 1983 and 2002. In addition, the transformation of the underlying investments into industry groups (using the same methodology as for the primary sample of deals) and analysis according to investment stages represents so far unpublished results on the VE database.

The mean comparison test in section 3.6.4 has demonstrated that the introduction of the control population is particularly important here. The VE secondary dataset provides an overview of actual, absolute historical buyout fund performance levels. The analysis on the primary dataset focuses on making explicit the sources of value creation that lead to a certain level of performance, neglecting emphasis on the actual level of returns of focal buyouts under review.