Private equity buyouts in Norway : inferring company valuations from public financial statements, and an analysis of the Norwegan buyout market

This thesis presents a framework to infer prices paid for companies from public financial statements. It shows that prices and valuations can be estimated accurately, as long as the buyout is done using common stock and that the company’s debts at the time of the transaction are not very different from the balance at year-end. Using this framework, a novel dataset of 44 buyouts in Norway from 1999-2012 is constructed and analyzed. Summary statistics of average valuations, valuation multiples, changes in capital structure and the use of equity instruments other than common stock are presented. Two findings from the literature are tested to see if they also hold for Norwegian data: Axelson et al.’s analysis on how access to credit affects the valuation of companies acquired by buyout funds, and Gompers and Lerner’s analysis of how fundraising to venture capital funds affects valuations of the companies acquired by venture capital funds. The credit spread does not seem to have affected pricing of companies acquired by Private Equity funds in Norway, contrary to the findings of Axelson et al. I am also not able to recreate the results of Gompers and Lerner on the effect of fundraising to the industry; however this seems to be caused by a combination of a small sample size and low data quality on fundraising. More research is therefore needed to conclude on this subject