Is there an Intended Long-Term Value Creation in Swedish Private Equity?

University essay from Handelshögskolan i Stockholm/Institutionen för företagande och ledning

Abstract: Sweden is one of the leading countries in Europe within Private Equity. The debate going on in the media focuses on the sustainability of improvements made by Private Equity players: that value is optimised for the exit but not cared for further than so. The Private Equity funds are usually predetermined to 10 years, but does that automatically mean that venture capitalists do not plan past this period? The idea of this study explores what the plan, ambition, and time horizon were for various investments. Interviews with 15 Private Equity players in Stockholm were performed, covering in excess of 60 Bn in Assets under Management. Three groups of value creation strategies could be observed. Group A that focused on the strategic plan in combination with margin improvements. Group B that focused on best practices and new strategic horizon. Lastly, group C that focused on switching the Board and management. The study suggests that Private Equity firms contribute with vast value to their portfolio companies, but also to society as a whole. Moreover, across the study, strong indication was found that Private Equity players are long-term thinking in their value creation, far past their exit.

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