Added Value Creation by Private Equity Funds in Acquisitions of Public Companies Shares in Developed Countries

The paper examines whether private equity funds create value for their portfolio companies in terms of an enhancement of financial metrics and appreciation in value. Considering a sample of 117 PIPE (private investments in public equity) deals in developed markets (USA, Western Europe, Australia, developed Asian countries), the paper demostrates a statistically significant influence of private equity funds on their portfolio companies. Moreover, the paper finds that the GP's experience, narrow specialization of the private equity firm and complementary companies in the fund's current portfolio are associated with higher operational performance and shareolder returns. The research contributes to the body of literature on this topic by presenting a novel methodology of tackling private equity research issues - using PIPE data, - and can be of interest both for potential private equity LPs, companies seeking PE money and investors willing to trade the company's shares on the stock exchange