Post exit operating performance of PE-backed firms: Evidence from Sweden

Abstract

This study investigates whether the effects of PE-investors ownership persist over time. Explicitly, an evenly distributed sample of BO- and VC-backed firms, 112 in total, are selected from the Swedish PE transaction market during the years between 2004 and 2009. The firms’ post exit operating performance are then examined in relation to a selected sample of matched firms to assess their post exit operating performance, using a set of accounting profitability and earnings measures. The findings from this study suggests that PE-backed firms demonstrate superior operating performance post exit, which to a large extent is driven by superior performance of VC-backed firms. BO-backed firms, however, did not demonstrate superior post exit operating performance. In addition, the operating performance with regards to first time BO as well as different exit routes are specifically investigated, but were not yielding any results that could lead to a conclusion of either better or worse post exit operating performance.