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Author : Paul Lavery
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (125 download)
Download or read book Essays on Private Equity Buyouts written by Paul Lavery and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Ji-Woong Chung
Publisher :
ISBN 13 :
Total Pages : 163 pages
Book Rating : 4.:/5 (681 download)
Download or read book Essays in Private Equity written by Ji-Woong Chung and published by . This book was released on 2010 with total page 163 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This first essay studies the motivations and the consequences of leveraged buyouts of privately held companies. Over the last two decades, the number (enterprise value) of leveraged buyout transactions involving privately held targets totals 10,013 ($855 billion), accounting for 46% (21%) of the worldwide leveraged buyout market. Yet the vast majority of academic studies focus on the buyouts of publicly held targets. This chapter investigates the effects of leveraged buyouts on privately held targets. I find that, unlike the corporate restructuring process of public firms after the buyouts, private targets sponsored by private equity firms grow substantially after the buyouts. The overall evidence suggests that private equity firms, through leveraged buyouts, facilitate private targets' growth by alleviating targets' investment constraints. In the second essay which is co-authored with Berk Sensoy, Lea Stern, and Mike Weisbach, we study model and estimate the total incentives facing private equity general partners. Incentives from the explicit fee structure ("two and twenty") of private equity funds understate the actual incentives facing private equity general partners because they ignore the rewards stemming from the effect of current performance on the ability to raise larger funds in the future. We evaluate the importance of these implicit incentives in the context of a learning model in which investors use current performance to update their assessments of a general partner's ability, and, in turn, decide how much capital to allocate to the partners' next fund. Our estimates suggest that implicit incentives from expected future fundraising are about as large as explicit incentives from carried interest in the current fund. This implies that the performance-sensitive component of revenue is about twice as large as suggested by previous estimates based only on explicit fees. Consistent with the model, we find that these implicit incentives are stronger when abilities are more scalable and weaker when current performance is less informative about ability. Overall, the results suggest that implicit incentives from future fundraising have a substantial impact on general partners' welfare and are likely to be an important factor in the success of private equity firms. In the last chapter, I study performance persistence in the private equity industry. Contrary to what has been known in the literature, I find that performance persistence in private equity is short-living. Current fund performance is positively and significantly associated with the first follow-on fund performance, but not with the second or third follow-on funds. Even the statistically significant association between two consecutive funds' performance is not economically large. The returns of the best performing quartile portfolio drops by about half, and those of the worst performing portfolio improve substantially from one fund to the next fund. There is no difference in the performance of the second (and after) follow-on funds of current top and bottom performing quartile portfolios. Performance converges in the long run. The commonality of relevant market conditions between two consecutive funds largely explains performance persistence. Also, excessive fund growth conditional on past performance erodes performance and reduces persistence.
Author : Oliver Ahlers
Publisher : Springer
ISBN 13 : 3658040947
Total Pages : 253 pages
Book Rating : 4.6/5 (58 download)
Download or read book Family Firms and Private Equity written by Oliver Ahlers and published by Springer. This book was released on 2014-07-25 with total page 253 pages. Available in PDF, EPUB and Kindle. Book excerpt: Family firms are of particular importance for many economies. We know little about family firm buyouts and how they are different from non-family firm buyouts. Oliver Ahlers investigates this under-researched topic. After a comprehensive literature review on family firm buyouts, the focus of his book is on the key steps of the investment process such as family firm valuation and negotiations between PE investors and family sellers. Additionally, it is investigated how “soft factors” such as trust, reputation or commitment could play an important role when PE and family firms interact. Throughout the book, differences between family and non-family firm buyouts are highlighted.
Author : Glebs Ivanovs
Publisher :
ISBN 13 :
Total Pages : 177 pages
Book Rating : 4.:/5 (863 download)
Download or read book Essays on Reputation of Private Equity Groups in Sponsored Leveraged Buyouts written by Glebs Ivanovs and published by . This book was released on 2013 with total page 177 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Nico Engel
Publisher :
ISBN 13 :
Total Pages : 368 pages
Book Rating : 4.:/5 (8 download)
Download or read book Essays on Value Creation and Risk Assessment in Private Equity-sponsored Buyouts written by Nico Engel and published by . This book was released on 2012 with total page 368 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Vrinda Mittal
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Essays in Private Capital written by Vrinda Mittal and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: These results get stronger post the financial crisis, when underfunded positions and their subsequent investments in private equity increased. The paper shows that traditionally positive post buyout efficiency results turn negative in recent years, as marginal investors matching with marginal private equity funds pull down the average. The most underfunded pensions also realize lower total private equity returns relative to the least underfunded ones. These results suggest possibility of a ``funding doom loop" as currently public pensions use assumed return on assets to calculate liabilities. The second essay titled ``Flattening the Curve: Pandemic-Induced Revaluation of Urban Real Estate" focuses on work from home with the onset of the COVID-19 pandemic and its effect on residential real estate prices across the U.S. We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas.
Author : Nils Hendrik Härtel
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (113 download)
Download or read book Essays on Performance, Secondary Buyouts, and Specialization in the Private Equity Industry written by Nils Hendrik Härtel and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Alexander Knauer
Publisher :
ISBN 13 :
Total Pages : 410 pages
Book Rating : 4.:/5 (89 download)
Download or read book Empirical Essays on Value Creation and Performance Effects of Private Equity Backed Company Buyouts written by Alexander Knauer and published by . This book was released on 2013 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Brian Ayash
Publisher :
ISBN 13 :
Total Pages : 124 pages
Book Rating : 4.:/5 (94 download)
Download or read book Essays on Leveraged Buyouts and Distressed Asset Pricing written by Brian Ayash and published by . This book was released on 2014 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters that concern leveraged buyouts and the risk- return relationship of distressed stocks. The first chapter uses hand collected cash flow statements to present the origin, ownership and use of cash in leveraged buyouts of large publicly traded U.S. firms by private equity funds between 1980 and 2006. I find suggestive evidence that target firms exhibit inefficient investment in the form of empire building pre-acquisition. Once controlled by private equity funds, firms exhibit a significant decline in investment, sales and asset growth, and employment growth as debt is used to motivate managers and forces the release of excess free cash flows. I do not find evidence of value creation, as the profitability of the underlying assets does not increase under private equity control. There is evidence of an increase in cash flows from financial management expertise. This form of excess cash generation contributes to the funding of dividends but the majority of the funding is from asset sales and reduced investment prior to exit. Cash flow statements are also used to evaluate returns. I find that the IRR generated by underlying assets is insufficient to cover the cost of financing debt, adversely affecting the IRR to equity holders. The second chapter, co-authored with Harm Schu ̈tt, tests whether leveraged buyouts improve targets operating performance? We hand collect complete, comprehensive financial statements for a sample of 138 large public U.S. firms that were acquired by private equity funds in leveraged buyouts between 1980 and 2006, and we examine the operating performance of these companies. Because of our comparatively large dataset with comprehensive financial statements we can better scrutinize operating performance and the technical accounting issues associated with leveraged buyouts. We find that the acquired firms do not exhibit post-buyout improvements compared to industry peers. In addition to operations, we evaluate outcomes for the acquired firms. In an expanded sample of 531 large public to private leveraged buyouts we find that 109 (21%) subsequently declare bankruptcy or were restructured outside the bankruptcy court while held by private equity funds. Our results suggest that while private equity managers might be savvy investors, they are not better operators of the target companies. The third chapter explores the breakdown in the risk-return relationship of financially distressed stocks. I model firms in financial distress using an endogenous default model and demonstrate that distressed firms have nonsymmetric return distributions and are systematically mispriced under the CAPM. I propose the use of a CRRA utility model to correct for the mispricing of positive skewness in the return distribution of distressed stocks. I create portfolios using four distress measures and compare the risk-return relationship under both models. I find that the anomalously low return delivered by portfolios of the most distressed stocks is driven by the inclusion of OTC traded stocks.
Author : Hyeik Kim
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (14 download)
Download or read book Essays on Private Equity and Real Estate written by Hyeik Kim and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays in illiquid assets. The first two chapters study private equity. The first chapter examines whether the incentives implicit in general partners' contracts lead them to make value-destroying investments? Using a sample of European buyouts, I show that the structure of compensation contracts encourages GPs to overinvest in deals that are in later period of the investment phase to maximize their fee profits, even if the deals are unprofitable. Within each fund, deals made in later period of the investment phase have lower profit growth and lower net returns than those made earlier. This relationship persists after controlling for GP skills, fund sequences, and vintage year. Importantly, later period deals are more likely to be value-destroying. The results are concentrated in funds with higher earlier performance and in more established funds, suggesting that GPs with lower reputation costs are more likely to engage in such behavior. The results further suggest that the current fee structure can induce GPs to maximize their profits at the expense of LPs. The second chapter studies the effects of infrastructure privatization with the focus the effect of private equity acquisition of infrastructure. The privatization of infrastructure, especially by investor-owned private equity (PE) funds, raises questions about the economics of public goods and the policy question of who should own infrastructure assets. Airports represent a class of infrastructure that is increasingly important to the global economy and has experienced significant privatization in recent decades. This paper studies how ownership changes affect airport performance, with a focus on understanding both the role of privatization and any distinct effects of PE vs. non-PE private ownership in subsequent transactions. Across twenty performance measures, we observe marked improvements after PE acquisitions--in particular from non-PE private firms, which account for most of the PE deals--with no evidence of pre-trends. In contrast, non-PE privatizations and subsequent acquisitions lead to weaker or no improvement, and where it does occur it appears to reflect targeting rather than operational changes. We also study fees charged to airlines and measures from the income statement; these indicate higher prices after privatization and dramatically higher net income following PE acquisitions. Overall, we find relatively little evidence that privatization alone increases performance, and instead find strong evidence that infrastructure funds improve airport efficiency. The third chapter studies whether one's wealth affects her preference for liquidity. Korea has a unique rental system where a tenant can choose between paying a lump sum deposit called Chonsei or a monthly rent when renting a house. This unique system allows me to take the difference between the cost of monthly rent payment and the cost of Chonsei to calculate the liquidity premium for a quasi-identical asset. I find that within an apartment complex-year month, per unit price of liquidity decreases in size and price of apartment units, suggesting that wealthier households, ex-post, are given less compensation for illiquidity. The result expands the notion of investor clientele in liquidity premium by Amihud and Mendelson (1986) indicating that the investment horizon of investors may not be the only determinant in the cross-sectional explanation of liquidity premium. Other characteristics, such as wealth, could affect one’s preference for liquidity.
Author : Emrah Arioglu
Publisher :
ISBN 13 :
Total Pages : 310 pages
Book Rating : 4.:/5 (845 download)
Download or read book Essays on Reverse Leveraged Buyouts written by Emrah Arioglu and published by . This book was released on 2013 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies target capital structure, transitory debt and corporate governance applications in private equity firms portfolio companies by utilizing a unique sample of reverse leveraged buyouts (reverse LBOs). In chapter 1, I investigate target capital structure and transitory debt. I show that firms follow target capital structures and they quickly reduce their debt ratios to levels near target ratios at the time of the reverse LBO. A minority of firms in the sample increase debt significantly after the reverse LBO. In accordance with the transitory debt hypothesis, these firms value the option to borrow and decrease their debt levels accordingly so that they can preserve the option to borrow for future. When the firms have valuable investment options, they once again issue transitory debt deliberately but temporarily, they move away from their target leverage ratios, use the proceeds from the issue mainly for investment purposes, and they revert back to the target leverage levels gradually. In chapter 2, I investigate the corporate governance structures employed by private equity firms in their portfolio companies. I show that, compared to the control firms, RLBO firms prefer to be incorporated in Delaware and have unitary boards, have younger board members with shorter tenures, have more financial experts on their boards, have CEOs with shorter tenures, prefer busy board members and busy boards. They also have smaller number of members on their boards, compared to previous findings from earlier decades. In addition, the majority of board members are effectively monitoring directors and the majority of board members on various committees of the boards are independent directors. In addition, firms are associated with high ownership by blockholders, high total managerial ownership, and low CEO ownership. Lastly, the evidence suggests that top executives and CEOs of RLBO firms do not receive significantly higher levels of compensation compared to control firms. Also, RLBO firms usually prefer to pay a higher fraction of total compensation in form of bonuses, and less in the form of stock option grants.
Author : Nicolaus Loos
Publisher : Springer Science & Business Media
ISBN 13 : 3835093290
Total Pages : 490 pages
Book Rating : 4.8/5 (35 download)
Download or read book Value Creation in Leveraged Buyouts written by Nicolaus Loos and published by Springer Science & Business Media. This book was released on 2007-11-05 with total page 490 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on a dataset of over 3,000 leveraged buyout transactions, including performance data, Nicolaus Loos analyses how financial investors create economic value through their investments. He shows that various exogenous factors with respect to timing, industry, public market as well as deal specific factors can statistically be related to a buyout deal's performance. He also provides evidence of a "GP effect" in leveraged buyouts, i.e. that certain characteristics of a Private Equity firm and its investment professionals as well as a firm's buyout strategy approach and certain buyout target characteristics are important success factors.
Author : Adrian Oberli
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (958 download)
Download or read book Essays on Investing in Private Equity written by Adrian Oberli and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis deals with practical issues when investing in private equity. The first essay offers investors a strategy how to recommit to achieve their desired allocation to the asset class. Recommitments are advised to be composed of 1) distributions and 2) commitments that are not expected to be called anymore, both weighted by the inverse of the actual investment degree, and 3) the amount necessary to rebalance the asset classes to the strategic asset allocation. Historical simulations show that investment degrees in the range of 0.7 to 0.8 can be attained. The second essay addresses the selection of individual funds and discusses whether past top-quarter performance can be seen as an indication of future outperformance and whether investing in outperforming GPs can be implemented in practice? Empirical evidence on private equity return persistence shows mixed results. Further, implementing an approach based on past performance is difficult as subsequent funds are raised before previous funds' performance can be accurately measured. In the end, a holistic due diligence process might offer the best insights on the factors that in the end determine success or failure of managers and give investors the best indication to find top quartile GPs. The third essay deals with the fact that investors not only try to choose the best performing GPs, but also try to diversify their investments geographically. As investors are increasingly interested in emerging markets, the essay examines the determinants of private equity market activity and shows the differences of drivers in Asia compared to developed markets. Exit opportunities and the amount of credit provided by the banking sector are strong drivers. Unlike in developed markets, emerging markets are negatively impacted by the amount of credit provided by the banking sector. Funding of transactions may stand in direct competition with banks, explaining the negative relationship with.
Author : Moritz Breuninger
Publisher : GRIN Verlag
ISBN 13 : 3656551855
Total Pages : 64 pages
Book Rating : 4.6/5 (565 download)
Download or read book Buy and Build Strategies in Management Buyouts written by Moritz Breuninger and published by GRIN Verlag. This book was released on 2013-11-29 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2013 in the subject Business economics - Business Management, Corporate Governance, grade: 7,5, Erasmus University Rotterdam (Strategic Management), language: English, abstract: Recent changes in the market for private equity have led investors to shift their attention away from market beta and towards generating alpha through the exploration of growth opportunities. PE firms increasingly use active ownership to implement these new growth plans. Buy and build strategies have emerged as a feasible and lucrative strategy of active ownership. The add-on acquisitions required when pursuing this strategy and the need to create value through synergistic effects necessitate post-acquisition integration efforts. Despite its relevance, researchers in the field of strategic management and finance have paid little attention to buy and build strategies. Moreover, they have yet to bridge the findings by scholars and practitioners on post-acquisition integration and active ownership. This paper seeks to fill this gap by answering the research question of how PE firms contribute to the integration process and how they handle task and affective conflicts and exercise management control with regard to the cooperation between the PE firm and the management of the portfolio company. Previous work has linked active ownership to capabilities and found that prior business experience is a strong predictor of active ownership, meaning a high level of contribution by the investment firm. This paper complements this work by analyzing active ownership of private equity firms in the context of post-acquisition integration in buy and build strategies and finds a direct link between capabilities and active ownership through four explanatory theory-building case studies. Birkinshaw et al. (2000)’s study on post-acquisition integration is used as a guiding concept in this paper. They distinguish between task integration, which is defined as the identification and realization of operational synergies, and human integration, which is defined as the creation of positive attitudes towards the integration and shared identity among employees. This paper creates a practical Framework for Integration Management on this notion and extends it by additional academic literature and relevant studies of consulting firms. A number of working propositions are derived from the literature and linked to the framework. Each proposition is then tested through within-case analysis and across-case comparison. Based on the evidence, three propositions are revised or extended whereas six propositions are supported. [...]
Author : Paul Pignataro
Publisher : John Wiley & Sons
ISBN 13 : 1118674456
Total Pages : 453 pages
Book Rating : 4.1/5 (186 download)
Download or read book Leveraged Buyouts written by Paul Pignataro and published by John Wiley & Sons. This book was released on 2013-11-15 with total page 453 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive look at the world of leveraged buyouts The private equity industry has grown dramatically over the past twenty years. Such investing requires a strong technical know-how in order to turn private investments into successful enterprises. That is why Paul Pignataro has created Leveraged Buyouts + Website: A Practical Guide to Investment Banking and Private Equity. Engaging and informative, this book skillfully shows how to identify a private company, takes you through the analysis behind bringing such an investment to profitability—and further create high returns for the private equity funds. It includes an informative leveraged buyout overview, touching on everything from LBO modeling, accounting, and value creation theory to leveraged buyout concepts and mechanics. Provides an in-depth analysis of how to identify a private company, bring such an investment to profitability, and create high returns for the private equity funds Includes an informative LBO model and case study as well as private company valuation Written by Paul Pignataro, founder and CEO of the New York School of Finance If you're looking for the best way to hone your skills in this field, look no further than this book.
Author : Claudia Zeisberger
Publisher : John Wiley & Sons
ISBN 13 : 1119327970
Total Pages : 368 pages
Book Rating : 4.1/5 (193 download)
Download or read book Mastering Private Equity written by Claudia Zeisberger and published by John Wiley & Sons. This book was released on 2017-08-07 with total page 368 pages. Available in PDF, EPUB and Kindle. Book excerpt: The definitive guide to private equity for investors and finance professionals Mastering Private Equity was written with a professional audience in mind and provides a valuable and unique reference for investors, finance professionals, students and business owners looking to engage with private equity firms or invest in private equity funds. From deal sourcing to exit, LBOs to responsible investing, operational value creation to risk management, the book systematically distils the essence of private equity into core concepts and explains in detail the dynamics of venture capital, growth equity and buyout transactions. With a foreword by Henry Kravis, Co-Chairman and Co-CEO of KKR, and special guest comments by senior PE professionals. This book combines insights from leading academics and practitioners and was carefully structured to offer: A clear and concise reference for the industry expert A step-by-step guide for students and casual observers of the industry A theoretical companion to the INSEAD case book Private Equity in Action: Case Studies from Developed and Emerging Markets Features guest comments by senior PE professionals from the firms listed below: Abraaj • Adams Street Partners • Apax Partners • Baring PE Asia • Bridgepoint • The Carlyle Group • Coller Capital • Debevoise & Plimpton LLP • FMO • Foundry Group • Freshfields Bruckhaus Deringer • General Atlantic • ILPA • Intermediate Capital Group • KKR Capstone • LPEQ • Maxeda • Navis Capital • Northleaf Capital • Oaktree Capital • Partners Group • Permira • Terra Firma
Author : Johan Cassel Pegelow
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (124 download)
Download or read book Essays in Private Equity written by Johan Cassel Pegelow and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
