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The Impact of Private Equity Firm Specialization on the Performance of Portfolio Companies

其他書名	Empirical Evidence from the DACH Region
出版	Universität St. Gallen, 2019
URL	http://books.google.com.hk/books?id=UX0cyAEACAAJ&hl=&source=gbs_api

註釋Using company-level accounting data, I compare the performance of portfolio companies of specialized and non-specialized private equity firms in terms of industry and investment stage. Specialization is measured by the Index of Competitive Advantage, which calculates the relative degree of specialization of a private equity firm. After controlling for company, private equity firm and transaction characteristics, I find that portfolio companies of industry specialized private equity firms have a higher mean operating profitability (measured as EBITDA/Assets) in the first three years after the transaction compared companies owned by non-specialized private equity investors. This effect remains statistically and economically significant when using EBIT to measure operating profitability. However, industry specialization has no significant effect on annual revenue growth. Investment stage specialization does not have a significant effect on either metric. I argue that industry specialized investors are better at identifying promising companies, improving the company operationally, reducing cost and finding an exit route through their extensive industry network than non-specialized private equity firms.