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Value creation in private equity portfolio companies : a structured review of evidence and proposed framework

  • Value creation of private equity (PE) firms in portfolio companies has received much attention in research. This systematic literature study aims to review, evaluate, and organize the empirical studies conducted in this field during the last four decades. Our findings from an in-depth analysis of 110 empirical papers reveal that the current understanding is incomplete, inconsistent, and unbalanced. Currently no consensus exists regarding a taxonomy or framework that encompasses all relevant dimensions and structures in the field. To guide future research, the study proposes a framework for value creation inputs, outcomes, and context factors. Constructed on a theoretical basis of agency and resource-based theory, we define distinct roles PE firms take in portfolio companies and specify an underlying typology of value creation levers that are applied. Additionally, we discuss the current research on outcomes of PE value creation efforts, and we identify and structure currently underrepresented context factors that influence value creation. Finally, we highlight potential avenues for future research, focusing on influential context factors and levers that catalyze growth in portfolio companies.

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Metadaten
Document Type:Article
Language:English
Author:Peter KrystaORCiD, Dominik K. KanbachORCiD
Chairs and Professorships:Chair of Strategic Entrepreneurship
DOI:https://doi.org/10.1080/13691066.2022.2117669
Parent Title (English):Venture Capital : an International Journal of Entrepreneurial Finance
ISSN:1464-5343
Volume:24
Issue:3-4
Year of Completion:2022
First Page:203
Last Page:286
Tag:Buyouts; Context factors; Operational performance; Portfolio companies; Private equity; Value creation
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:AJG Ranking / 2
VHB Ranking / C
SJR Ranking / Q1
Licence (German):License LogoUrheberrechtlich gesch├╝tzt