Værdiansættelse og nedbrydning af værdiskabelsen under EQT og Goldman Sachs Capital Partners ejerskab af ISS Facility Services A/

Martin Richter Olsen

Student thesis: Master thesis


In 2005 a private equity fund consisting of EQT III & IV and Goldman Sachs Capital Partners bought the service company ISS A/S and delisted the company from the Danish stock exchange. Assuming that the private equity fund decides to exit through an IPO, the purpose of this thesis is to estimate the value of ISS A/S in order to determine the sources of value creation during the ownership. The methodology for this is the same as one of the most comprehensive studies of value creation in private equity. In this way, it is possible to make a comparison with the empirical studies' examination of returns and sources of value creation. In the first part of the thesis, the goal is to estimate an enterprise value of ISS A/S as of 31.10.2012. This will be based on the weight between DCF-model and multiples from comparable companies and transactions in order to be able to calculate the annual return (IRR) from the capital injection by the private equity fund. In this way, an enterprise value for ISS A/S of DKK 48.305 bn has been calculated, resulting in an effective increase of the fund's equity of EUR 8.574bn and representing an IRR of 10.65. In the latter part of the thesis, the impact on value creation in ISS A/S from respectively leveraging, de-leveraging, EBITDA, multiple and combination effects have all been examined. The result of this decomposition of components shows that leverage has contributed 40% of the value creation, while the EBITDA effect has positively contributed approximately 147%. On the other hand, both the de-leveraging effect (-31%), multiple effect (-27%) and combination effect have all been negative components. The reason for the high EBITDA component is due to entirely positive effects from revenue growth (105%), primarily created on the basis of the 325 acquisitions ISS A/S has made between 2005 and 2009. In contrast, deterioration in earnings resulted in a negative effect of -5% to the EBITDA component. A comparison of empirical studies to the value creation in ISS A/S shows that they are distributed significantly differently, underlining the specifications associated with the private ownership of ISS A/S. Based on the comparison with other studies, the conclusion is that the return from the private equity investment in ISS A/S has not been at a satisfactory level, despite the fact that there has been a value increase in the market value of the equity.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2013
Number of pages110