Operational effectiveness in buyouts

Sammanfattning: This thesis examines the operating performance during the holding period in 38 Swedish buyouts entered and exited between 1998 and 2008. The study consists of three parts: profitability, working capital management and employee management. Each buyout is assigned a peer group in order to adjust their development from macroeconomic effects and to compare their entry and exit point levels of performance to their industry counterparts. It is found that the industry adjusted profitability measured as ROIC and EBITDA margin increases significantly in the buyout companies during the holding period. The buyout companies have a lower average level of profitability than their peers at the entry point. In the case of ROIC it is shown that the relative underperformance at the entry point has explanatory power on the positive development during the holding period. It is also found that the level of net working capital in relation to sales decreases significantly more in the buyouts than in their respective peer groups derived from reduction of receivables and inventory. The results are to a large extent in line with previous empirical studies. The thesis presents two contributions to the research on Swedish buyouts. The positive development of performance in the buyouts during the holding period is connected to the initial underperformance. It also presents a breakdown analysis of changes in working capital.