Private Equity Value Creation: Munich Model (VC103)

Overview of a model from academia that uses the Weighted Average Cost of Capital (WACC) formula to “unlever” private equity returns. Visit auxiliamath.com/video/vc103 to download supporting Excel files and episode notes.
0:45 Academic and Industry Studies
3:54 Munich Model Derivation
8:55 Munich Model Shortcomings
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Literature Sources:
“Value Creation Drivers in Private Equity Buyouts: Empirical Evidence from Europe,” Ann-Kristin Achleitner, Reiner Braun, Nico Engel, Christian Figge, and Florian Tappeiner, The Journal of Private Equity, Vol. 13, No. 2 (Spring 2010), pp. 17-27. www.jstor.org/stable/43503632
“International Evidence on Value Creation in Private Equity Transactions,” Benjamin Puche, Reiner Braun, and Ann-Kristin Achleitner, The Journal of Applied Corporate Finance, Vol. 27, No. 4 (Fall 2015), pp. 106-122. doi.org/10.1111/jacf.12152
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[@timothybracken1728]

I'm so confused ! Summarize this video someone

[@auxiliamath]

This is a deep dive on how some LPs and industry researchers measure the sources of value creation in private equity deals. I don't recommend it because there are ways to get better results with easier math. For example, see: kzbin.info/www/bejne/emipf6F-eqemr5I