ASSESSMENT OF THE INVESTMENT PROJECT EFFECTIVENESS FOR THE ACQUISITION OF COMPANIES BY THE DIRECT INVESTMENT FUND

Abstract

The performance of investment projects in acquisitions of companies by private equity funds has been explored by assessing the financial and valuation results of such transactions in two directions: change in the valuation multiple of an acquired company over the period of the investment project and the impact of a fund on a company’s operational efficiency. As a result of the analysis, the hypothesis of the higher EV/EBITDA exit multiple of the private equity fund compared to the same entry multiple was not confirmed. However, the hypothesis that private equity funds are able to increase the operational efficiency of portfolio companies on average better than other types of investors, confirms the effectiveness of private equity funds and high performance of such investment projects.

Keywords

• investments
• investment project
• value of business
• private equity funds
• operational efficiency
• regression analysis
• merger transaction
• acquisition transaction
• valuation multiple