Empirical Part III — Buyout Strategies

Abstract

In the first chapter of empirical results, it was established that leveraged buyouts as part of the Private Equity investment asset class do create superior value when compared to public markets. This finding was achieved based on (i) the control population dataset from Thomson Venture Economics, which included fund return data, as well as (ii) the Limited Partners’ primary dataset of individual buyout transactions. The analysis further highlighted under which exogenous (i.e. market and acquisition related) conditions buyout transactions were more likely to be successful. Moreover, an analysis of the key financial accounting patterns — both on the target company level and with respect to its underlying industry financial dynamics at the time of deal entry and exit — had revealed where the value creation in buyout transactions stems from. From both the Thomson Venture Economics fund return analysis as well as the deal level findings, it became evident that the variance of success between individual deals, funds and the various General Partners was considerable.