TY - JOUR
T1 - RISK AND PERILS IN LBO TRANSACTIONS
AU - CAPIZZI, Vincenzo
AU - Giovannini, Renato
AU - Pesic, Valerio
PY - 2019/1/1
Y1 - 2019/1/1
N2 - In this study, the risks and perils arising from LBO transactions are
considered. By focusing attention on 2,450 deals, for which we compare
the performance achieved before and after the deal, our study adds to
previous literature that has investigated the post-LBO operating
performance and the factors which can determine the success of those
deals. In particular, we confirm the hypothesis of the peril of assets
stripping, even if we find evidence that the presence of private equity,
among other factors, can help to mitigate that issue. We find evidence
that, especially in the short term, enterprises suffer from a slight
deterioration in operating performance compared to their situation
before the buyout. Moreover, under specific circumstances, enterprises
experience a slight improvement in the ability to generate cash. Finally,
we find positive evidence about the presence of private equity
investors, which through their governance are mainly able to promote
the growth of firms, as well as to increase the capability to generate
cash, together with the hypothesis to generate positive effects on the
level of employment. At the same time, we find also evidence that the
presence of private equity investors is related in some cases to distress
for firms involved in LBO transactions.
AB - In this study, the risks and perils arising from LBO transactions are
considered. By focusing attention on 2,450 deals, for which we compare
the performance achieved before and after the deal, our study adds to
previous literature that has investigated the post-LBO operating
performance and the factors which can determine the success of those
deals. In particular, we confirm the hypothesis of the peril of assets
stripping, even if we find evidence that the presence of private equity,
among other factors, can help to mitigate that issue. We find evidence
that, especially in the short term, enterprises suffer from a slight
deterioration in operating performance compared to their situation
before the buyout. Moreover, under specific circumstances, enterprises
experience a slight improvement in the ability to generate cash. Finally,
we find positive evidence about the presence of private equity
investors, which through their governance are mainly able to promote
the growth of firms, as well as to increase the capability to generate
cash, together with the hypothesis to generate positive effects on the
level of employment. At the same time, we find also evidence that the
presence of private equity investors is related in some cases to distress
for firms involved in LBO transactions.
KW - LBO
KW - Governance
KW - Private Equity
KW - Asset Stripping
KW - Employment
KW - Distressed
KW - LBO
KW - Governance
KW - Private Equity
KW - Asset Stripping
KW - Employment
KW - Distressed
UR - https://iris.uniupo.it/handle/11579/110227
U2 - 10.22495/cocv17i1siart12
DO - 10.22495/cocv17i1siart12
M3 - Article
SN - 1727-9232
VL - 17
SP - 306
EP - 324
JO - CORPORATE OWNERSHIP & CONTROL
JF - CORPORATE OWNERSHIP & CONTROL
IS - 1
ER -