Private equity and entrepreneurial firms - A case study of IK Investment Partners' acquisition of Ramudden

Sammanfattning: This paper chronicles IK Investment Partners' acquisition of Ramudden in April 2014. The aim of this study is to analyze the activities that private equity players undertake to attempt to add value to entrepreneurial businesses, identify how contemporary techniques such as buy-and-build are utilized in practice, and what factors private equity players need to consider when acquiring founder-owned firms. In line with the previous literature, our findings seem consistent with private equity players being able to add value to portfolio companies. Moreover, we find that the private equity industry has transformed and evolved from efficiency-driven acquisition towards growth-oriented acquisitions, with buy-and-build strategies becoming increasingly commonplace. Finally, we find that cultural and emotional aspects can be of critical importance in practice, and that private equity firms need to manage such "soft values" properly in order to not alienate the incumbent management team. Given that previous literature often misses such topics, we propose that future research should focus on emotional and cultural issues, and study how investors should consider such topics in the best way in order to balance not alienating the target company's management team, but at the same time implement measures necessary to grow the business efficiently.