Turnaround Private Equity - Distressed Targets in Buyout Transactions
Advisor: Julius Maisch, MSc.
Type: Bachelor's Thesis
Start: June 2025
Overview
Turnaround private equity - the acquisition of underperforming or financially distressed firms with the objective of strategic and operational revitalisation - remains a specialised yet increasingly relevant subset of the buyout market. Despite its significance, both academic and practitioner literature offer limited consensus on how distress is defined, measured, and acted upon in empirical contexts.
This thesis contributes to a broader internal research initiative aimed at structuring and analysing private equity transaction data. The student will work with a curated subset of proprietary deal-level data and apply a classification logic to identify distressed targets, offering analytical input for ongoing research efforts at the chair.
Objective
The thesis aims to explore how financial distress is defined and operationalised in the context of private equity transactions. Building on a structured review of academic literature, the student will develop a classification logic for identifying distressed targets and apply it to a proprietary dataset to derive insights on turnaround potential and common target traits.
Tasks
- Conduct a structured literature review on turnaround investing, distress measurement, and related buyout strategies.
- Process and refine deal-level financial data (e.g. leverage, coverage, profitability metrics).
- Develop and apply a transparent classification logic to identify distressed deals.
- Analyse the identified turnaround cases to uncover common financial, operational, or contextual characteristics.
Requirements
- Strong interest in private equity, distressed investing, and empirical finance.
- Prior exposure to financial statement analysis and basic econometrics/statistical modelling.
- Proficiency in Excel and foundational skills in Python.
Supervision & Support
- Individual guidance on conducting literature reviews and identifying relevant academic sources.
- Iterative feedback on literature review framing, analytical design, and visualisation.
Literature
Edith S Hotchkiss, David C Smith, Per Strömberg, Private Equity and the Resolution of Financial Distress, The Review of Corporate Finance Studies, Volume 10, Issue 4, December 2021, Pages 694–747, https://doi.org/10.1093/rcfs/cfab015
Contact & Application
If you are interested in writing your thesis on this topic, please indicate this in your application. Please note that this topic can be expanded and/or taken in other directions depending on the student's own interests and ideas.