Operational Value Creation in Secondary Bayouts in the Nordic Region: An Emprical Study of Private Equity Owned Companies

Mads Ulf Gabel-Jørgensen

Student thesis: Master thesis


During the last decade, secondary buyouts have greatly increased in popularity and have become one of the most used exit routes in the private equity industry. The increased activity of secondary buyouts spurred the interest of many researchers to explain this phenomenon, and the findings are mostly skeptical. However, the conducted studies are still rather new and more research into the topic is necessary. The purpose of this paper is to enhance the understanding of PE-ownership as a long-term governance structure, and its contribution to operational value creation in secondary buyouts.
In order to test the hypotheses, and ultimately answer the research question, I constructed several different data sets containing SBOs and non-PE-backed companies from the Nordic region. These data sets were each comprised by specific PE firm - and general partner characteristics, which were used to analyze operating performance and growth.
I find that secondary buyouts exhibit lower operational profitability compared to non-PE-backed private companies, but that they are superior when it comes to growth. Additionally, I find mixed results in terms of whether different characteristics of PE firms and general partners has the potential to contribute to operational value creation in SBOs. I find no evidence suggesting that large PE firms are better at improving operating performance and increase growth in their secondary target companies. On the contrary, the results of the ownership of general partners with a financial background indicates that these are better at improving efficiency in their Nordic target companies.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2017
Number of pages118
SupervisorsMorten Holm