Riverside: A private equity acquisition

Abstract

Private equity (PE) boomed in the 2000’s, aligned with an increase in their debt levels. Traditionally, PE firms bought target companies using mostly debt to create short term growth and sell profitably. Nowadays,some PE firms transform their targets to create sustainable value. Yet, little work is published on leveraged buyouts (LBO) in the middle market with sustainable value creation for the target. The objective of this work is therefore to develop a real-world case study analyzing if a PE acquisition with LBO in the middle market fits the fund’s strategy for sustainable growth. This single case study was developed in Spain using qualitative and quantitative research conducted in 2020. The case studies the successful 2015 investment of the American PE firm Riverside in Euromed, a Spanish herbal extracts manufacturer. It shows that PE can benefit from sustainable improvement of a target company if all steps of an investment decision-making process are executed rigorously.