Værdiskabelse i Private Equity
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Lezgovko, Julija1, Forfatter
Norman Sørensen, Peter2, Vejleder
1Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7001              
2Økonomisk Institut, Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7014              
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Ukontrollerede emneord: Kapitalstruktur optimering, reduktion af agentproblemet
 Abstract: Private Equity (PE) is one of the most controversial phenomena both in academic world and in the press. PE funds also play a major role in the investment world, mainly due to the extraordinarily high returns that PE industry from time to time is able to achieve. The returns for the average American buyout funds for many years have exceeded the returns generated by the listed markets, earning 20-27% more during funds’ life and more than 3% per year, compared to the S&P 500 index.
Overall, PE investments can be divided into Venture Capital and Buyouts, where the latter focuses on mature companies with an established business model and earnings capability that enables the acquisition partly to be financed by debt. Today, buyouts are the largest part of the PE industry and based on that the thesis will focus on this part of PE activity.
The aim of this thesis is to investigate and analyze whether PE funds create value in a portfolio company through capital structure optimization and reduction of agency costs in an LBO of a listed company. The research questions were explored through the theoretical analysis of the factors, which create most value for PE and by case study of ISS A/S. The decision to focus on just these two elements, capital structure optimization and reduction of agency problem, was based on the theoretical analysis of PE funds' value creation process which showed their significance.
Capital structure changes in PE fund's portfolio company are one of the main characteristics of PE funds. According to M&M propositions without taxes the decisions about capital structure are irrelevant, while M&M propositions with taxes determine that a complete debt financing is the most optimal for a company, due to the effect of the tax shield. PE Funds finance their acquisitions by obtaining debt in the target company and thus gain the tax benefits of the higher deductible interest. Trade-off theory takes point of departure in M&M propositions and also recognizes that the tax shield has great influence on the creation of value. However, it argues that the effects of the bankruptcy costs, which increase as the company's leverage increases, must also be taken into account. PE ownership model reduces some of these bankruptcy costs faster by capital injection compared to other forms of ownership, thereby reducing capital costs and contributing to greater value creation.
Agency problems undermine companies’ value by inappropriate use of resources; hence reduction of agency problem is the other value-creating instrument. Agency fees in the PE context can be reduced through concentrated and active ownership, management's ownership and reduction of free CF’s. Concentrated and active ownership reduces the free-rider problem related to monitoring; management’s ownership streamlines interests of both parties, while reduction of free CF’s solves the problem by management's use of perks and over-investments.
ISS A/S's case study showed that the company's value increased significantly at higher leverage rate. Furthermore, complete debt financing was found to be the optimal solution for the company when corporate taxes were introduced in the model, which is consistent with the theory. In the model with bankruptcy costs the WACC has been increasing, however bankruptcy probability fell despite higher debt-equity ratio of the company, due to the company’s ability to meet its obligations to interest payments on the debt. A part of the value creation in ISS A/S is considered to stem from the alignment of management’s and owners’ interests through more active and concentrated ownership, as well as through the reduction of the free CF.
Based on these findings the public acceptance of PE funds should be greater, as it was shown through the case study that the company was not emptied of values as a result of its LBO, but rather the value was created.
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Bogmærk denne post:
 Type: Speciale
Alternativ titel: Kapitalstruktur optimering, Reduktion af agentproblemer
Alternativ titel: Value creation in Private equity
Alternativ titel: Capital structure optimization, Reduction in agency problems
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Sprog: Danish - dan
 Datoer: 2013-07-30
 Sider: -
 Publiceringsinfo: København : Københavns Universitet
 Indholdsfortegnelse: 1. Indledning 7
1.1. Motivation for valg af emnet og emnets relevans 8
1.2. Problemformulering .10
1.3. Metodologi og opgavens struktur .11
1.4. Afgr‚nsning 12
1.5. Kildekritik12
2. Værdiskabelse i Private Equity 13
2.1. Værdiskabelsesdimensioner i LBO’s 13
2.2. Årsager til værdiskabelsen i LBO’s 14
2.3. Specialets fokusområder.19
3. Private Equity og Finansiel Engineering 21
3.1. Private Equity og optimal kapitalstruktur21
3.2. Kapitalstruktur og M&M propositioner uden selskabsskatter 24
3.3. Kapitalstruktur og M&M propositioner med selskabsskatter .29
3.4. Kapitalstruktur og effekt af konkursomkostninger 33
3.5. Delkonklusion37
4. Principal agent teori og Private Equity 39
4.1. Principal agent teorien39
4.2. Kritik af principal agent teorien46
4.3. Reduktion af agentomkostninger i LBO’s.47
4.4. Delkonklusion50
5. Værdiskabelse i PE fondens portefljeselskab – ISS casestudie 52
5.1. Præsentation af ISS A/S .52
5.2. Opkøbsprocessen og den nye koncernstruktur.53
5.3. Værdiskabelse gennem kapitalstruktur‚ndringer i ISS A/S.55
5.4. Værdiskabelse gennem reduktion af agentomkostninger .60
5.5. Delkonklusion65
6. Konklusion 67
7. Perspektivering 69
8. Litteraturoversigt 71
9. Bilag 76
 Note: -
 Type: Speciale
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