Joint Acquisitions between Private Equity Firms and Strategic Investors: An Empirical Study in M&A Boom and Bust Cycles with a Case Study on Ubisoft

Julian Laubrock & Mehmet Ă–cal

Student thesis: Master thesis


The purpose of this study is to investigate unconventional business models of private equity investors, specifically, joint venture deals with strategic investors. The private equity industry experienced an enormous growth from the 1980s until today and is still facing a positive outlook in the current market environment. However, this positive outlook fuels the competition of private equity investors internally and externally with strategic investors, such as corporates. One symptom of a fierce competition is the level of un-invested capital, the so- called dry powder. This may raise the question of how private equity firms can unlock their latent value again. In light of this, this study investigates the relationship of external conditions as well as investor-related rationales on the decision to partner with their counterparts. Looking at the period from 2000 to 2016, we investigate the relationship between M&A boom and bust cycles and joint venture transactions to total PE-backed deals. To do so, we apply the Heckman method to infer missing transaction sizes as well as time series models, such as the Augmented Dickey-Fuller test. We conclude that the external market environment does not influence the joint venture deal activity. However, it may impact their rationales to co-operate to either avoid a fierce price competition or to access complementary assets to restructuring firms. As the external environment is only a part of the much more complex picture, we conduct a hypothetical case study of a joint acquisition of the video game publisher Ubisoft between a private equity firm and a strategic investor in order to understand differing rationales and their influence on the decision to enter a partnership. Primarily, we find differences in the operational value creation strategies, risk-return requirements, the valuation of provided assets additional to the funding, and the differing investment horizons most impactful on joint venture deals. By stepping into the field of unconventional business models of private equity investors, our results may provide insights that can be used by researchers in the private equity industry as well as by M&A practitioners while dealing with joint venture deals.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2017
Number of pages141