Operating Improvements in Buyout Firms - A Quick Fix or Sustainable Improvements?

Sammanfattning: This paper seeks to explain the operating performance of buyout firms during a three year period post exit. This matter is analyzed and explained through a quantitative method performed on a unique sample of 31 Swedish buyout firms exited between 1995-2007. Firstly, we analyze the operating performance during the buyout period in order to see if there have been any improvements. Secondly, we analyze the operating performance during a three year period post exit to observe whether these improvements are sustainable after the Private Equity firms have exited the investments. We find that buyout firms on average develop negatively during the post buyout period compared to their respective industries and can thus conclude that the operating improvements during the buyout period are unsustainable.