Essay: "Value creation in Private Equity backed Buyouts" wins annual BVA Award

Brussels, 31 March 2010 – Today, the Belgian Venture Capital & Private Equity Association (BVA) granted its BVA Essay Award for the 4th time, in co-operation with Deloitte. This year, the award for best essay about the Private Equity and Venture Capital industry went to Vivian Mathieu of the Louvain School of Management, Université Catholique de Louvain, with his dissertation submitted for the degree of Master in Business Engineering “Value creation in Private Equity backed Buyouts”, and this under the direction of Professor Armin Schwienbacher.

The winning essay was presented for the degree of Master in Business Engineering at the UCL (Year 2008-2009) and investigates the different drivers creating value in companies after their buyout through Private Equity investment.

The essay focuses on the Belgian Private Equity Market with the objective to examine and provide a better understanding of its dynamic drivers of value creation. Previous studies had already indicated that in a typical successful buyout, the four major value drivers were: (i) sales growth; (ii) margin expansion; (iii) financial leveraging and (iv) dynamic valuation multiples. The author has studied a large sample of Belgian buyouts which indicated that a wide range of transactions are not following the exact same route of value creation. The value creation of the buyouts did indeed vary significantly and the author identified in his essay that the Value capture in Belgian buyouts has been highly influenced by “market timing” and by “proactive strategies” of the buyout firm.

In order to assess and explain the Equity values created by Private Equity (PE) backed buyouts, the author applied and modified the “Dupont System”, an internationally known complex financial model.

The outcome of the model on the Belgian PE Buyouts indicated the impact of:

The results of the study contribute to the literature on the valuation relevance of buy outs backed by Private Equity investments. The essay concludes that Private Equity with a focus on proactive value creation plays an essential role within the Belgian economy.

Through this award, the Belgian Venture Capital & Private Equity Association (BVA) and Deloitte wish to stimulate the academic research about private equity (PE) and venture capital (VC). This should lead to a better understanding of the discipline and its added value to society especially for entrepreneurs, employees Works councils and various governmental organizations.

The rating of the Jury was based on four criteria:

The winning essay can be consulted on the website of the BVA: www.bva.be

 

About BVA

The Belgian Venture Capital & Private Equity Association, in short "BVA", is the professional association representing the community of venture capital and private equity active in Belgium. BVA has at present 78 members, including 39 investment companies, who invested in 2008 €668 million in Belgian companies. 

The BVA’'s mission is: 

For more information please contact: Guy Geldhof, Secretary General of the BVA, tel: 0475/52.86.86