Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics
Autor(a) principal: | |
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Data de Publicação: | 2023 |
Tipo de documento: | Dissertação |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.14/42237 |
Resumo: | Following a massive wave of leveraged buyouts (LBOs) which took place in the 1980s, the private equity asset class started gaining mediatic resonance both for its uncommonly sharp risk return profile and the meticulous exploitation of structured finance. Due to the increasing maturity of the LBO industry and the consequences of the covid pandemic, LBO firms have been progressively looking at buy and build strategies (BaBs) as a strategic tool to generate value for their limited partners, with the volume of add-on acquisitions increasing at a CAGR of 13,2% in the period 2006-2016. Through thorough research and analysis, this paper shows how PE firms can generate returns and value through BaBs and what are some distinctive features of the market for this peculiar type of transactions. Among its most interesting findings, this paper demonstrates how the increased volume of add-on activity has been driven majorly by mid-market operations and characterized by an increased focus on ICT industries and on the financial services industry. Furthermore, it provides evidence on how large cap platforms appear to be keener towards performing cross-border consolidation processes which, according to existing literature, should deliver the highest IRR. Finally, this paper demonstrates empirically the positive impact of performing add-on acquisitions on multiples expansion even after controlling for financial cycle conditions, which are the element with the largest impact on the multiples expansion achieved by PE firms. |
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Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamicsDomínio/Área Científica::Ciências Sociais::Economia e GestãoFollowing a massive wave of leveraged buyouts (LBOs) which took place in the 1980s, the private equity asset class started gaining mediatic resonance both for its uncommonly sharp risk return profile and the meticulous exploitation of structured finance. Due to the increasing maturity of the LBO industry and the consequences of the covid pandemic, LBO firms have been progressively looking at buy and build strategies (BaBs) as a strategic tool to generate value for their limited partners, with the volume of add-on acquisitions increasing at a CAGR of 13,2% in the period 2006-2016. Through thorough research and analysis, this paper shows how PE firms can generate returns and value through BaBs and what are some distinctive features of the market for this peculiar type of transactions. Among its most interesting findings, this paper demonstrates how the increased volume of add-on activity has been driven majorly by mid-market operations and characterized by an increased focus on ICT industries and on the financial services industry. Furthermore, it provides evidence on how large cap platforms appear to be keener towards performing cross-border consolidation processes which, according to existing literature, should deliver the highest IRR. Finally, this paper demonstrates empirically the positive impact of performing add-on acquisitions on multiples expansion even after controlling for financial cycle conditions, which are the element with the largest impact on the multiples expansion achieved by PE firms.Após uma onda massiva de leverage buyouts (LBOs) que ocorreu na década de 1980, a classe de ativos de private equity começou a ganhar ressonância midiática tanto por seu perfil de retorno de risco excepcionalmente agudo quanto pela exploração meticulosa de finanças estruturadas. Devido à crescente maturidade da indústria de LBO e às consequências da pandemia de covid, as empresas de LBO têm vindo a olhar progressivamente para as estratégias de buy and build (BaBs) como uma ferramenta estratégica para gerar valor para os seus Limited Partners, com o volume de add-on aquisições aumentando a um CAGR de 13,2% no período 2006-2016. Por meio de pesquisa e análise minuciosas, este artigo mostra como as empresas de PE podem gerar retornos e valor por meio de BaBs e quais são algumas características distintivas do mercado para esse tipo peculiar de transação. Entre suas descobertas mais interessantes, este documento demonstra como o aumento do volume da atividade complementar foi impulsionado principalmente por operações de mercado intermediário e caracterizado por um foco maior nas indústrias de ICT e na indústria de serviços financeiros. Além disso, fornece evidências de como as plataformas de grande capitalização parecem estar mais interessadas em realizar processos de consolidação transfronteiriça que, de acordo com a literatura existente, devem fornecer a IRR mais alta. Por fim, este artigo demonstra empiricamente o impacto positivo da realização de aquisições add-on na expansão de múltiplos.Shuwaikh, FátimaVeritati - Repositório Institucional da Universidade Católica PortuguesaMiotto, Edoardo2023-10-01T00:30:22Z2023-05-082023-012023-05-08T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/masterThesisapplication/pdfhttp://hdl.handle.net/10400.14/42237TID:203300319enginfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-10-03T01:42:50Zoai:repositorio.ucp.pt:10400.14/42237Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T20:28:58.325668Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
title |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
spellingShingle |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics Miotto, Edoardo Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
title_short |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
title_full |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
title_fullStr |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
title_full_unstemmed |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
title_sort |
Add-on acquisitions as a strategic tool for LBO value creation : an analysis of return drivers and market dynamics |
author |
Miotto, Edoardo |
author_facet |
Miotto, Edoardo |
author_role |
author |
dc.contributor.none.fl_str_mv |
Shuwaikh, Fátima Veritati - Repositório Institucional da Universidade Católica Portuguesa |
dc.contributor.author.fl_str_mv |
Miotto, Edoardo |
dc.subject.por.fl_str_mv |
Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
topic |
Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
description |
Following a massive wave of leveraged buyouts (LBOs) which took place in the 1980s, the private equity asset class started gaining mediatic resonance both for its uncommonly sharp risk return profile and the meticulous exploitation of structured finance. Due to the increasing maturity of the LBO industry and the consequences of the covid pandemic, LBO firms have been progressively looking at buy and build strategies (BaBs) as a strategic tool to generate value for their limited partners, with the volume of add-on acquisitions increasing at a CAGR of 13,2% in the period 2006-2016. Through thorough research and analysis, this paper shows how PE firms can generate returns and value through BaBs and what are some distinctive features of the market for this peculiar type of transactions. Among its most interesting findings, this paper demonstrates how the increased volume of add-on activity has been driven majorly by mid-market operations and characterized by an increased focus on ICT industries and on the financial services industry. Furthermore, it provides evidence on how large cap platforms appear to be keener towards performing cross-border consolidation processes which, according to existing literature, should deliver the highest IRR. Finally, this paper demonstrates empirically the positive impact of performing add-on acquisitions on multiples expansion even after controlling for financial cycle conditions, which are the element with the largest impact on the multiples expansion achieved by PE firms. |
publishDate |
2023 |
dc.date.none.fl_str_mv |
2023-10-01T00:30:22Z 2023-05-08 2023-01 2023-05-08T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/masterThesis |
format |
masterThesis |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.14/42237 TID:203300319 |
url |
http://hdl.handle.net/10400.14/42237 |
identifier_str_mv |
TID:203300319 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
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RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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