PRIVATE EQUITY AS A TOOL FOR CORPORATE VALUE CREATION

Abstract

This article examines private equity (PE) as a tool for corporate value creation rather than merely a source of financing. Drawing on the foundational definitions of Kaplan and Strömberg, Gompers, Metrick and Yasuda, Lerner and others, it argues that the distinctive feature of private equity lies in the combination of capital, significant ownership and active involvement in portfolio companies. The study demonstrates that once a PE investor acquires a controlling or substantial position, the central task shifts from purchasing the company to transforming it. Evidence on the sources of value creation shows that revenue growth and margin expansion—driven by operational improvement, stronger management, technology adoption and buy-and-build strategies—account for the majority of value generated, rather than ownership or financial engineering alone. The article further shows that corporate governance, alignment with international reporting standards and the integration of environmental, social and governance (ESG) considerations reinforce the same transformation process and improve a company's readiness for successful exit. Situating the analysis within Uzbekistan's evolving investment framework—including the Uzbekistan-2030 Strategy and recent capital-market reforms—the author concludes that private equity should be regarded as a mechanism of corporate transformation whose wider benefits extend to the acquired company, consumers, the state and the broader economy.