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An empirical analysis of private equity transactions in Europe: a comparison of entry and exit multiples in light of the Covid-19 pandemic and implications for value creation
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Resumo(s)
Transaction multiples incorporate the expected future growth and cost of capital of the
purchased company and are therefore likely to be affected by exogenous shocks. This paper
examines how transaction multiples were affected by COVID-19. Using 923 private equity (PE)
deals from European countries between March 2018 and December 2021, outcomes are
examined for different time periods and industries. Estimates are evaluated using a difference in-difference approach based on non-essential (treatment) and essential (control) industries.
Main results confirm a negative impact on average multiples of the treatment group. These
findings suggest both an opportunity as well challenge for PE value creation.
Descrição
Palavras-chave
Private equity Transaction multiples Covid-19 Europe Value creation