Abstract
This study analyzes the performance of private equity-backed European companies. The purpose of this research is to explore the impact of private equity investments on the variables of profitability and dimensional growth for the target companies. We studied the performance of private equity-backed companies located in the top eight European countries in terms of number of investments – the Czech Republic, France, Germany, Italy, Spain, Sweden, Netherlands and the UK. We created a database of 2,429 unlisted companies that received private equity investments in the period from 2003 to 2009, and we compared them with a sample of 2,506 non-private equity-backed companies with similar characteristics in terms of their size and industry. Secondly, we compared the performance of private equity-backed companies within countries, taking the performance of private equity-backed companies in Italy as a benchmark. The analyses were conducted through the use of a statistical probit model, Ordinary Least Squares (OLS) regression models and Student’s T-test. The results of the analyses suggest that on average, private equity investments have a positive effect on target companies in terms of dimensional growth compared to non-invested companies. In the first post investment years, private equity operators act to improve the growth of private equity-backed companies, even decreasing profitability, therefore preferring long-term results. We prove that private equity-backed companies show similar performance throughout Europe, while non-private, equity-backed companies do not. In most cases, we found similar performance in the different countries. There are homogeneous results in all countries because internationalization has induced common practices over time.
GIUSY CHESINI, ELISA GIARETTA. (2014) Do Private Equity-Backed Companies Perform Similarly Throughout Europe?, International Review of Management and Business Research, Volume 3, Issue 3.
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