The Impact of Buyouts on Swedish Portfolio Companies : A Quantitative Study on Performance 1998-2011

Abstract: The private equity market has been a hot topic of debate since it first started to emerge. As it has become more frequently apparent in the Swedish economic and financial market, the debate regarding its impact in Sweden has also risen. The debate contains various opinions whether the private equity firms, through buyouts uses tax breaks or arbitrage opportuni-ties to "quick flip" the investments on the expense of workers and wages or if the PE firms create operational and economic value. Previous studies regarding this topic have mostly been conducted in the U.S, Canada or to some extent in the U.K. This paper aims to, through a quantitative method, investigate and present whether the buyouts have an impact on Swedish portfolio companies or not, and if they do, what kind of impact the buyouts have. This will be done through an event study, based on data collection from portfolio companies that have experienced a buyout made by a private equity firm. The data will then be compared with data from peer groups and ana-lyzed through statistical methods in SPSS. The main findings in this thesis suggest that buyouts do not have, neither a positive nor negative impact on the performance of portfolio companies in Sweden. The tests allow us to conclude that PE firms do not have market timing skills. Neither can we conclude that PE firms cause layoffs of workers or lowering of wages.