The Limits of Private Equity: Evidence from Denmark

Thomas Poulsen and Steen Thomsen

in The Oxford Handbook of Private Equity

Published in print March 2012 | ISBN: 9780195391589
Published online September 2012 | | DOI:

Series: Oxford Handbooks

The Limits of Private Equity: Evidence from Denmark

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This article analyzes Danish evidence on the limitations of private equity, which show that in some cases, the real effects of private equity are not always desirable. It argues that the expropriation of stakeholders—particularly employees that have made firm-specific investments—can be a suboptimal strategy that would result in counterproductive and ultimately value-destroying behavior. It then discusses the investment decision rule and the buyout of Royal Scandinavia, a Danish art industry conglomerate. This article concludes with a summary of several lessons, which serve as propositions for future research and practice.

Keywords: Danish equity; limitations; private equity; expropriation; stakeholders; firm-specific investments; value-destroying behavior; investment decision rule; Royal Scandinavia

Article.  6806 words. 

Subjects: Economics ; Financial Markets ; Industry Studies

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