What are the most effective factors of value creation in LBO transactions : corporate governance vs leverage effect ? Case study : EQT

Details

Supervisors

Grégoire, Philippe ; Pitta Ferraz, Duarte

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

“WHAT ARE THE MOST EFFECTIVE FACTORS OF VALUE CREATION IN LBO TRANSACTIONS: CORPORATE GOVERNANCE VS LEVERAGE EFFECT CASE STUDY: EQT” The purpose of this master’s thesis is to identify the most effective factor of value creation, between implementing a good corporate governance structure and setting up leveraged transaction structures. After having described the couple of protagonists that we can usually meet in doing LBO transactions and their different roles, we have discussed about value creation and more specifically about how leverage or governance can be factors of value creation to a portfolio company. We have seen that the leverage effect is a way to optimize the financing acquisition structure in order to multiply the return for the investors while acting onto the corporate governance will aim to align the interests of the top management team and of the investors implying consequently value creation for the business. With the help of internal documents obtained from EQT, we have challenged some theoretical aspects to the E.On Energy from Waste case, one of the most successful infrastructure deal in Europe. EQT is a Swedish private equity house founded in 1994. One of which principal characteristic is its strategic plan is to use the expertise of industrial advisors, top executives in their field of expertise, to develop and help with the roll out of successfully the development strategies. The data available on the case being reviewed supports our view considering that the maximize return will be achieved using both factors of value creation considered in this master’s thesis, acknowledging nevertheless that most of value creation is coming from long term and sustainable growth.