Home is wherever your private equity firm takes you
(2024) NEKN02 20241Department of Economics
- Abstract
- Title: Home is wherever your private equity firm takes you - A quantitative analysis comparing cross-border and domestic* transaction multiples in PE acquisitions of Nordic companies
Seminar date: 30 May 2024
Course: NEKN02, Master Essay – Finance Programme, 15 ECTS
Authors: Clarissa Nowak, Sofia Sjöholm
Advisor: Jens Forssbaeck
Keywords: Private Equity, Buyouts, Cross-Border, Valuation, Nordic market, Liability of foreignness, M&A Waves
Research question: Are valuations (measured by EV/Revenue) achieved in cross-border PE acquisitions of Nordic companies, significantly larger than those achieved in domestic* transactions? Is the multiple larger during M&A waves or larger with geographic distance?
Purpose: This study... (More) - Title: Home is wherever your private equity firm takes you - A quantitative analysis comparing cross-border and domestic* transaction multiples in PE acquisitions of Nordic companies
Seminar date: 30 May 2024
Course: NEKN02, Master Essay – Finance Programme, 15 ECTS
Authors: Clarissa Nowak, Sofia Sjöholm
Advisor: Jens Forssbaeck
Keywords: Private Equity, Buyouts, Cross-Border, Valuation, Nordic market, Liability of foreignness, M&A Waves
Research question: Are valuations (measured by EV/Revenue) achieved in cross-border PE acquisitions of Nordic companies, significantly larger than those achieved in domestic* transactions? Is the multiple larger during M&A waves or larger with geographic distance?
Purpose: This study aims to analyse potential disparities in the valuation multiple (EV/Revenue) when Nordic companies are acquired by PE firms in cross-border acquisitions compared to domestic* acquisitions, considering the influence of information asymmetries. Additionally, it aims to investigate variations in these multiples during periods of increased M&A activity and in correlation with the geographical distance between the capital cities of the involved countries
Methodology: The study employs a quantitative analysis using a deductive approach, conducting multiple regression on secondary data from Orbis. It investigates relationships between variables based on 206 acquisitions from 2003-01-01, to 2022-12-31.
Theoretical perspectives: The theoretical framework includes acquisition and uncertainty perception theories, drawing on prior research on cross-border transactions, M&A waves, and the Nordic market.
Results: The findings reveal a significant correlation between cross-border transactions and EV/Revenue multiple, whereas no such relationship is observed for M&A waves or geographical distance.
Conclusions: In conclusion, this study confirms that cross-border transactions yield, on average, 81.5 percent larger EV/Revenue multiples compared to transactions within the Nordics, however, cross-border transactions inherently lead to elevated valuation multiples due to factors like information asymmetry.
In this study domestic* is defined as being within the Nordic region (Sweden, Norway, Denmark, Finland and Iceland) (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9159742
- author
- Sjöholm, Sofia LU and Nowak, Clarissa LU
- supervisor
- organization
- course
- NEKN02 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Private Equity, Buyouts, Cross-Border, Liability of foreignness, M&A Waves
- language
- English
- id
- 9159742
- date added to LUP
- 2024-08-12 15:59:13
- date last changed
- 2024-08-12 15:59:13
@misc{9159742,
abstract = {{Title: Home is wherever your private equity firm takes you - A quantitative analysis comparing cross-border and domestic* transaction multiples in PE acquisitions of Nordic companies
Seminar date: 30 May 2024
Course: NEKN02, Master Essay – Finance Programme, 15 ECTS
Authors: Clarissa Nowak, Sofia Sjöholm
Advisor: Jens Forssbaeck
Keywords: Private Equity, Buyouts, Cross-Border, Valuation, Nordic market, Liability of foreignness, M&A Waves
Research question: Are valuations (measured by EV/Revenue) achieved in cross-border PE acquisitions of Nordic companies, significantly larger than those achieved in domestic* transactions? Is the multiple larger during M&A waves or larger with geographic distance?
Purpose: This study aims to analyse potential disparities in the valuation multiple (EV/Revenue) when Nordic companies are acquired by PE firms in cross-border acquisitions compared to domestic* acquisitions, considering the influence of information asymmetries. Additionally, it aims to investigate variations in these multiples during periods of increased M&A activity and in correlation with the geographical distance between the capital cities of the involved countries
Methodology: The study employs a quantitative analysis using a deductive approach, conducting multiple regression on secondary data from Orbis. It investigates relationships between variables based on 206 acquisitions from 2003-01-01, to 2022-12-31.
Theoretical perspectives: The theoretical framework includes acquisition and uncertainty perception theories, drawing on prior research on cross-border transactions, M&A waves, and the Nordic market.
Results: The findings reveal a significant correlation between cross-border transactions and EV/Revenue multiple, whereas no such relationship is observed for M&A waves or geographical distance.
Conclusions: In conclusion, this study confirms that cross-border transactions yield, on average, 81.5 percent larger EV/Revenue multiples compared to transactions within the Nordics, however, cross-border transactions inherently lead to elevated valuation multiples due to factors like information asymmetry.
In this study domestic* is defined as being within the Nordic region (Sweden, Norway, Denmark, Finland and Iceland)}},
author = {{Sjöholm, Sofia and Nowak, Clarissa}},
language = {{eng}},
note = {{Student Paper}},
title = {{Home is wherever your private equity firm takes you}},
year = {{2024}},
}