Private Equity and Luxury industry: what impact of PE acquisitions on Italian companies' performance?

Private equity activity involves investment funds that acquire and manage privately held companies, aiming to improve their value through strategies such as operational upgrades, strategic guidance, and financial restructuring in the medium and long term. The final goal of these operations aims to achieve a profitable exit within a medium-term timeframe. PE impact on target companies’ performance has been hugely debated by existing literature, trying to find a potential correlation between potential performance improvements and PE acquisition. This thesis aims to shed a light on PE acquisitions impact on Italian companies strictly operating in the luxury market, trying to find significant insights that merge PE world and the luxury sector, a niche that assumes a unique position within the global economy, where the balance between exclusivity and growth is crucial. The study is based on the monitoring of PE-backed firms’ performance in terms of average trends, followed by a comparison of PE-backed items with the group of peers, and a final multi-linear regression analysis in which interesting results emerge. The number count analysis and the following statistical study are based on the monitoring of four financial indicators: (I) equity value, (II) total asset value, (III) EBITDA and (IV) Net debt / EBITDA, whose observation allows to offer insights from different standpoints of a company’s financial status. Results from the number count analysis have been commented and described among the two samples, for each of the indicator listed. Finally, these results have been deepened through a regression analysis based on a DiD (Difference-in-Difference) approach, that allows to confer a statistical validity to the research, in order to understand if the trends found related to the financial parameters analyzed could be directly attributed to the PE acquisition, or may have derived from other external factors.