Private equity funds acquire existing firms and by implementing valuable growth strategies they add value to these acquired firms. However, private equity funds have special characteristics and their value creating strategies are distinct from more traditional strategic buyers. The main goal of this thesis is to improve our scientific understanding of the value generated by private equity funds. The thesis analyzes the activities of private equity funds and their role in creating value from an analytical perspective. The theoretical framework incorporates special characteristic of the funds and deals with macroeconomic risk as well as information quality.