Value Creation 2.0: A Framework for Measuring Value Creation in Private Equity Investment

This report from INSEAD focuses on the question of value creation in private equity (PE). Key topics on today's private equity agenda are sources of investment returns and operational value creation. 

There are several ways to measure PE investment returns, however, most of them have some missing elements to provide a complete overview.

INSEAD Value Creation 2.0 (IVC 2.0) provides are more solid solution. IVC 2.0 deconstructs an investment's return into five categories of value creation - Change in Revenue, Margin, Multiple, Cash flow and Capital structure. 

Contents

  • Overview
  • Conventional framework
  • Distinct value drivers from academia
  • Emerging frameworks
  • Duff & Phelps - Created value attribution
  • INSEAD value creation 2.0
  • Conclusion

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