Value Creation and Exits in Private Equity: A Case Study of Triton Partners' Investment in Eleda

Abstract: In this paper we analyse Triton Partners' investment in Eleda. Eleda is an infrastructure service group established by Triton in 2017 through a roll-up in the Swedish excavation service market. Following exit preparations from mid-2019 including several routes, the management team of Eleda ended up acquiring the company from Triton in early 2020, known as a management buyout. The aim of this study is to analyse what value enhancing initiatives Triton performed in the investment, as well as the unusual situation where management bought out the private equity firm. We find that Triton already prior to the investment developed a detailed agenda of initiatives and successfully executed several of them, generating well-above required returns. These initiatives included, among others, driving the roll-up, governance initiatives, and setting up slim group functions supporting the decentralized business model. We also find that the exit decision from Triton's perspective mainly was driven by fund strategy aspects as they needed a realized return to facilitate the upcoming fundraising. Triton's main route was an IPO, but the management did not feel ready for the public environment and believed that staying private longer would better suit the company's strategy, which was the main motive behind the buyout. Lastly, we find that the management buyout was made possible due to the management team already being significant minority owners, having good bank relationships, and a proven ability to conduct large transactions.