Værdiskabelse i kapitalfondes danske porteføljeselskaber

Hans Calov Jørgensen

Student thesis: Master thesis


In modern times, private equity firms have had an increasing influence on the M&A market in Denmark. Acquisitions of companies which are undergoing generational changes or restructuring have been the main target of the PE firms. Through active ownership and flexible capital structure the PE firms want to develop and improve the efficiency of the companies and afterwards sell them with economic profit. This thesis analyzes the ability of the PE firms to generate economic value through EVA and multiples. The analysis of the thesis concludes that the PE firms are able to generate an average EVA of -3,6 to 6,5 mill. dkr. in 2008-2011. In 2009 and 2010 the EVA were at a negative and very low level due to the impact of the financial crisis. However, in 2011 EVA increases to 4,8 mill. dkr. which indicates, that the PE-firms are returning to profitable conditions. These results are mainly driven by lower WACC but also influenced by the profitability in different industries. Furthermore, the thesis includes an analysis of multiples in 2011. With an average EV/EBITDA of 10,4, an average market-to-book ratio of 3,6 and an average P/E of 20,3, the portfolio companies are traded at higher multiples than comparable listed companies. These multiples have been driven by better EBITDA as the average estimated transaction multiple has decreased. Including a sensitivity analysis in which changes of WACC and ROIC are made and where EV/EBIT is used, no significant circumstances which would change the main conclusions were found. Therefore, the analysis has showed that PE-firms definitely have been able to generate economic value in the portfolio companies and to its investors. Nevertheless, a lot of critics have criticized the way PE firms operate including their contribution to society and sharing of information. As a result, PE firms have tried to be more transparent to the public by publishing yearly material and CG policies, but still the industry is threatened by possible restrictive jurisdiction. Also the Danish market for corporate control is influenced by a lot of takeover defenses which limit the M&A opportunities of the PE firms. These issues can influence investors’ decisions regarding acquisitions of Danish companies in the future. Not being able to attract investors would be a big issue in the Danish business sector regarding growth and employment. Because one thing is certain, PE firms are able to develop and improve efficiency in companies which aren’t managed optimal, and therefore the business sector needs them as a part of the developing economic life.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2013
Number of pages125