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Essays on Private Equity: Operating Performance, Investment Selection Success and Costliness of Placement Agents

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Essays on Private Equity: Operating Performance, Investment Selection Success and Costliness of Placement Agents UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MARKO RIKATO ESSAYS ON PRIVATE EQUITY: OPERATING PERFORMANCE, INVESTMENT SELECTION SUCCESS AND COSTLINESS OF PLACEMENT AGENTS DOCTORAL DISSERTATION Ljubljana, 2014 UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS MARKO RIKATO ESSAYS ON PRIVATE EQUITY: OPERATING PERFORMANCE, INVESTMENT SELECTION SUCCESS AND COSTLINESS OF PLACEMENT AGENTS DOCTORAL DISSERTATION Ljubljana, 2014 AUTHORSHIP STATEMENT The undersigned Marko Rikato, a student at the University of Ljubljana, Faculty of Economics, (hereafter: FELU), declare that I am the author of the doctoral dissertation entitled Essays on private equity: operating performance, investment selection success and costliness of placement agents (Empirična analiza zasebnega kapitala: uspešnost poslovanja, izbira investicij in cena agentov plasiranja), written under supervision of Assoc. Prof. Aleš Berk Skok and co-supervision of Assoc. Prof. Ludovic Phalippou. In accordance with the Copyright and Related Rights Act (Official Gazette of the Republic of Slovenia, Nr. 21/1995 with changes and amendments) I allow the text of my doctoral dissertation to be published on the FELU website. I further declare the text of my doctoral dissertation to be based on the results of my own research; the text of my doctoral dissertation to be language-edited and technically in adherence with the FELU’s Technical Guidelines for Written Works which means that I o cited and / or quoted works and opinions of other authors in my doctoral dissertation in accordance with the FELU’s Technical Guidelines for Written Works and o obtained (and referred to in my doctoral dissertation) all the necessary permits to use the works of other authors which are entirely (in written or graphical form) used in my text; to be aware of the fact that plagiarism (in written or graphical form) is a criminal offence and can be prosecuted in accordance with the Criminal Code (Official Gazette of the Republic of Slovenia, Nr. 55/2008 with changes and amendments); to be aware of the consequences a proven plagiarism charge based on the submitted doctoral dissertation could have for my status at the FELU in accordance with the relevant FELU Rules on Doctoral Dissertation. Date of public defense: 12 December, 2014 Committee Chair: Assoc. Prof. Igor Lončarski Supervisor: Assoc. Prof. Aleš Berk Skok Co-supervisor: Assoc. Prof. Ludovic Phalippou Member: Asst. Prof. Peter Groznik Member: Assoc. Prof. Marco Da Rin Ljubljana, 12 December, 2014 Author’s signature: _______________________ ACKNOWLEDGEMENTS It took five years of research and writing of the doctoral dissertation in order to achieve the desired objective: to empirically contribute to science. On this journey I was accompanied and supported by a few important individuals to whom I need to sincerely thank for all the professional, moral, financial and intellectual support in the right moments. Firstly I would like to thank my family which supported me through the entire period of my formal education. My mother Mirjana and my father Ivan have been offering their support at every step and without them this thesis would not be possible. I would like to express my gratitude to my supervisor Assoc. Prof. Aleš Berk Skok for his professional, moral and intellectual support, for appropriately guiding me through the research process, and for making sure the quality of the research work was in the foreground. I would also like to thank my co-supervisor Assoc. Prof. Ludovic Phallipou for passing on the enthusiasm about private equity which is the field of both, my work and research. My deepest gratitude goes to my life partner Lea Ružič who has been constantly supporting me, has trusted me and has shared all my ups and downs. She has also been making sure there is an appropriate balance between our relationship, my business life, research work and several sport activities, which represent an important part of my life, including surfing and powder skiing. I am extremely grateful for her support and understanding of the quality of life concept. The doctoral thesis was undoubtedly also enhanced in terms of quality by the doctoral dissertation committee, consisting of Assoc. Prof. Igor Lončarski, Asst. Prof. Peter Groznik in Assoc. Prof. Marco Da Rin. The second and third year of my doctoral study were financially supported by the European Social Fund and University of Ljubljana within the framework of Innovative scheme of co-funding doctoral studies for promotion of cooperation with economy and solving contemporary social challenges, led by the dr. Ivan Svetlik in cooperation with the Ministry of Education, Science, Culture and Sport. EMPIRIČNA ANALIZA ZASEBNEGA KAPITALA: USPEŠNOST POSLOVANJA, IZBIRA INVESTICIJ IN CENA AGENTOV PLASIRANJA) POVZETEK Empirično usmerjena doktorska disertacija ponuja odgovore na tri pomembna vprašanja, ki so pomembna za vlagatelje, ki vlagajo v sklade zasebnega kapitala1 (omejeni družbeniki – družbeniki komanditisti oziroma vlagatelji/investitorji), vlade in njihove agencije ter portfeljska podjetja zasebnega kapitala, ki so prejemniki »pametnega denarja«2 s strani družb zasebnega kapitala (generalni družbeniki – družbeniki komplementarji). Splošen vtis v praksi je, da v razvitih državah skladi zasebnega kapitala ustvarjajo nadpovprečne donose svojim vlagateljem, in sicer z uporabo »pametnega denarja« za nakup portfeljske družbe zasebnega kapitala (ali z odkupom s finančnim vzvodom ali v kakršni koli drugi obliki transakcije), spodbujanjem rasti ter ustvarjanjem dodane vrednosti v porfeljski družbi zasebnega kapitala. Po drugi strani, če podjetje ne prevzame sklada zasebnega kapitala, potem naj ne bi bilo zmožno rasti in biti dobičkonosno kot v primeru, če bi bilo prevzeto s strani sklada zasebnega kapitala. Investitorji lahko zagotovijo denar, ki v rokah skladov v sklopu investiranja v portfeljske naložbe zasebnega kapitala postane »pametni denar«, neposredno ali posredno preko agentov plasiranja. Nobena raziskava še ni bila opravljena na področju upravičenja obstoja agentov plasiranja. Vsa ta vprašanja so pomembne dileme v praksi in cilj disertacije je, da poda odgovore na navedena vprašanja. V disertaciji proučujem operativno uspešnost družb, ki so bile odkupljene s finančnim vzvodom s strani sklada zasebnega kapitala v Srednji, Vzhodni, Jugovzhodni Evropi ter baltskih državah (razvijajoče se evropske države) in jih primerjam s primerljivimi podjetji v panogi. Z uporabo standardne tehnike finančnega in računovodskega analiziranja podjetja, ki je bilo odkupljeno s finančnim vzvodom, analiziram 69 portfeljskih družb, ki so bila prevzeta s finančnim vzvodom v obdobju 2002-2007. Moji rezultati nakazujejo, da model odkupa podjetja s finančnim vzvodom v povprečju ne deluje dobro v razvijajočih se evropskih državah. Moji rezultati prikazujejo, da ne prihaja do statistično značilnega izboljšanja dobičkonosnosti, merjene z dobičkonosnostjo prodaje, dobičkonosnostjo sredstev ali profitne marže v obdobju treh let po zaključku prevzema podjetja s finančnim vzvodom. V tistih primerih, kjer prihaja do izboljšanja dobičkonosnosti, rezultati potrjujejo, da skladi zasebnega kapitala v povprečju izboljšajo dobičkonosnost večjim družbam. Kljub dejstvu, da lahko skladi zasebnega kapitala izberejo in kupijo nadpovprečno delujoča podjetja, dokazujem, da kupljena podjetja v povprečju ne vzdržujejo nadpovprečne rasti, in sicer se le-ta približuje povprečni rasti. Pomembo je, da podjetja, ki jih odkupijo strani zasebnega sklada, bolj učinkovito upravljajo z obratnim kapitalom ter ustvarjajo več delovnih mest v primerjavi s primerljivimi podjetji v panogi. 1 Banke, bogati zasebni vlagatelji, zavarovalnice, skladi “fund-of-funds”, pokojninski skladi, podjetja, drugi upravljavci sredstev in druge entitete, ki vlagajo v sklade zasebnega kapitala. 2 Imenuje se pametni denar, ker družba zasebnega kapitala ne vloži zgolj denarja kot finančno naložbo v družbo, ampak tudi poznavanje panoge ter sposobnosti vodenja, ki naj bi omogočale podjetju rast in izboljšanje dobičkonosnosti, ustvarjanje dodane vrednosti, itd. Rezultati nakazujejo, da podjetja, ki so jih kupili skladi zasebnega kapitala, v obdobju po odkupu s finančnim vzvodom v povprečju vlagajo manj in uporabljajo več razpoložljivega denarnega toka za višje stroške financiranja zaradi višje zadolženosti. S proučevanjem finančnih in računovodskih podatkov 28 evropskih družb, ki so bile prevzemne tarče (t.j. da bi bile prevzete s finančnim vzvodom) skladov zasebnega kapitala v letu 2005, vendar na koncu niso bile prevzete, ugotavljam, da te tarče same ustvarjajo rast dobičkonosnosti kapitala, kljub temu, da jih niso prevzeli skladi zasebnega kapitala. Ugotavljam, da skladi zasebnega kapitala prevzamejo nadpovprečno donosna podjetja in prav tako identificirajo družbe, ki imajo potencial za rast. Moji rezultati dokazujejo, da imajo skladi zasebnega kapitala dobre zmožnosti prepoznavanja nadpovprečnih družb, ki delujejo bolje kot panožno povprečje, ne glede na dejstvo, ali te družbe prevzame sklad zasebnega kapitala ali ne. Dokaza za potrditev hipoteze organizacijskih sprememb ni, ker družbe, ki jih ni prevzel sklad zasebnega kapitala, kljub temu dosegajo rast in izboljšanje dobičkonosnosti. Uspešnost podjetij, ki so jih prevzeli skladi zasebnega kapitala v letu 2005, ne presega finančne uspešnosti potencialnih tarč, ki niso bile prevzete. Družbe, ki so jih prevzeli skladi zasebnega kapitala upravljajo dobičke bolj učinkovito, česar ni možno zaslediti pri družbah, ki jih niso prevzeli skladi zasebnega
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