Hvad kan danske selskaber lære af kapitalfondsmodellen: Herunder en undersøgelse af danske porteføljeselskabers performance i perioden 2007 til 2011

Abstract

The purpose of this thesis is to examine to which extent the private equity model works and how Danish companies can learn from it. The findings will be based on a thorough theoretical discussion of methodology as well as an in‐depth analysis of why value is created. The methodology will be subject to empirical testing on the Danish market in order to determine if the private equity firms have created positive growth in the operations of their portfolio ‐ be it absolute or relatively compared to peers. As such, this thesis will contain an executed empirical investigation of Danish portfolio companies in the period of 2007 to 2011. Finally, the report will make a founded assessment of applicable best practices for other companies to adopt based on the theoretical as well as empirical evidence provided. Value creation methodology in private equity firms commonly share the same roots since the primary emphasis has always been maximizing shareholder value. The first private equity firms preferred value creation through financial engineering while modern practices are more focused on operational improvements. A series of research has therefore been carried out to determine how much of this value is caused by operational improvements compared to market‐related competencies. The conclusion of international as well the personally provided research agrees that the private equity model is a good method for value creation, both internationally and in Denmark. Companies are experiencing a high degree of operational improvements and the development through the financial crisis has generally been positive, both in absolutes as well as relatively compared to peers. The empirical research reveals that return on operations is driven by the turnover rate of invested capital, improved net working capital, and increased emphasis on CAPEX investments. Revenue is subject to a high degree of uncertainty, but it seems to experience superior development whereas costs show neither superior nor inferior development compared to peers. The most important points for other companies to learn, is to refrain from focusing on accounting profit and instead emphasize economic value. This requires an overview of the enterprise, thinking in long‐term strategies, a greater focus on cash flows, and finally a change in the mindset of the company from going concern to flexible ownership. It is also important to align the interest of the management and the owners in order to decrease agency costs. This is done best by giving management part ownership and ensuring that they are rewarded according to performance through linking bonus pay to a scorecard. At the same time, one should strive to create a more active and value creating board, which acts more like a sparring partner than a supervisor. Finally, one should aim to increase decision power in management and decrease the period of decision‐making.