Impact of Post-Merger Integration (PMI) on Financial Improvements and Firm Value Enhancement in Private Equity Funds (PEF)

Private Equity Funds (PEFs) acquire companies and implement Post-Merger Integration (PMI) strategies to enhance financial performance and maximize firm value. This study empirically analyzes the impact of financial improvements achieved through PMI on firm value growth. To accomplish this, successful PMI cases—Blackstone's acquisition of Hilton and Skylake's acquisition of Outback Steakhouse Korea—are examined, while the failed Daimler-Benz and Chrysler merger serves as a comparison case. The core empirical analysis focuses on Companies A and B, in which the researcher directly executed PMI, leading process improvements and financial restructuring. Through hands-on involvement, strategies for cost reduction, revenue enhancement, capital structure optimization, cash flow improvement, and the establishment of a Sales and Operations Planning (S&OP) system were implemented, contributing to financial stability and increased profitability. In Company A, where PMI was successfully completed, EBITDA increased from a deficit in 2018 to KRW 145 billion in 2023, and ROIC improved from -3.7% to 11.2%. DCF modeling indicates that Company A's firm value increased approximately threefold from KRW 80 billion at acquisition to KRW 236.4 billion. Company B, still in the early PMI stage, experienced a temporary profitability decline due to increased investment costs but demonstrated long-term firm value appreciation potential. These findings confirm that PEFs should view PMI as a strategic tool for sustained corporate growth and competitive advantage, not merely a financial restructuring process.