How retailers create value through LBOs

Abstract

This Thesis aims at studying the role of Private Equity and LBOs in value creation within the retail industry, and more specifically on the factors that contributed to economic and social value creation in SMCP’s buyout by KKR. The paper is divided into two differentiated parts. The first section is initiated with an overview of the retail sector, its market trends and transaction activity. It is then followed by a description of the PE landscape as a whole and within retail. Lastly, the drivers, rationale, and computations of the different economic and social metrics used for the central case study of the Thesis are introduced. The second part focuses in the profound study of SMCP’s buyout by KKR, started in 2013 and exited in 2016 (sale to a strategic) and 2017 (sale of the remaining minority investment trough IPO). The deal analysis is completed with the decomposition and comparison of these value creation metrics with empirical studies currently in literature regarding returns in the broader international PE industry