TY  - JOUR
U1  - Wissenschaftlicher Artikel
A1  - Krysta, Peter
A1  - Jauch-Degenkolb, Janina
A1  - Kanbach, Dominik K.
T1  - Barbarians inside the gates
BT  - how private equity firms create value
JF  - Journal of business strategy
N2  - Purpose
Facing increased asset prices and growing competition, private equity firms needed to innovate their established business model and shift from focusing on financial engineering to creating operating value. Yet, the authors understand little about how private equity firms increase the value of companies in their portfolios. This paper aims to shed light on organizational strategies, activities and governance principles that private equity firms use to create value.

Design/methodology/approach
This investigation combines several qualitative research approaches. Using in-depth interviews with executives in 35 private equity firms, the authors define industry-specific design principles for value creation using a Gioia methodology. They then use the Eisenhardt methodology to make in-depth case comparisons among sample firms.

Findings
Private equity firms employ one of four strategies – labeled “Infiltrator,” “Consultant,” “Organizer” or “Investor” – to create value in portfolio companies, each with a different organizational structure, level of cooperation between investor and portfolio firm and specific configuration of design elements.

Originality/value
To the best of the authors’ knowledge, this study is the first to focus on private equity value creation strategies from an organizational perspective. To their knowledge, no other publication has tapped this deeply into the interface between the private equity firm and the portfolio company to define the exact approach taken by the firm. This study contributes to the emerging discussion around the nonfinancial inputs to value creation. In addition, this qualitative research design is underrepresented in private equity research.
KW  - Private equity
KW  - Value creation
KW  - Portfolio companies
KW  - Operational performance
KW  - Buyouts
KW  - Strategy
Y1  - 2022
SN  - 0275-6668
SS  - 0275-6668
U6  - https://doi.org/10.1108/JBS-04-2022-0064
DO  - https://doi.org/10.1108/JBS-04-2022-0064
VL  - 44
IS  - 6
SP  - 344
EP  - 353
ER  -