When do managers seek private equity backing in public-to-private transactions?

J Fidrmuc, A Palandri, Peter Roosenboom, Dick van Dijk

Research output: Contribution to journalArticleAcademicpeer-review

16 Citations (Scopus)

Abstract

Managers have the choice to take the firm private themselves in a management buyout or to seek private equity backing. We argue that managers seek private equity backing in case they are more constrained to finance the deal themselves. We confirm the hypothesis using a sample of UK public-to-private transactions over the period 1997¿2003. A post going private performance analysis reveals that both management buyouts and private equity backed deals outperform their industry peers. However, private equity backed deals outperform their peers already before the deal takes place whereas management buyouts improve performance afterwards. This suggests a passive role for private equity firms in going private transactions.
Original languageEnglish
Pages (from-to)1099-1139
Number of pages41
JournalReview of Finance
Volume17
Issue number3
DOIs
Publication statusPublished - 2013

Research programs

  • EUR ESE 31
  • EUR ESE 33

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