Buying to Sell: A Theory of Buyouts

Arbeitspapier

Private equity owned firms have more leverage, more intense compensation contracts, and higher productivity than comparable firms. We develop a theory of buyouts in oligopolistic markets that explains these facts. Private equity firms are more aggressive in inducing restructuring compared to incumbents since they maximize a trade sale price. The equilibrium trade sale price increases in restructuring not only by increasing the profit of the acquirer, but also by decreasing the profits of non-acquiring firms. Predictions on the exit mode and on when private equity firms can outbid incumbents in the market for corporate control are also derived.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 817

Classification and Topics

• Classification: Wirtschaft ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Market Structure, Firm Strategy, and Market Performance: General ; Firm Objectives, Organization, and Behavior: General
• Subject: Acquisitions ; Buyouts ; Buy-to-sell ; Buy-to-keep ; Leveraged buyouts ; Private equity ; Take-overs ; Temporary ownership ; Übernahme ; Private Equity ; Oligopol ; Unternehmenserfolg ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Norbäck, Pehr-Johan ; Persson, Lars ; Tåg, Joacim
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/81501
• Last update: 10.03.2025, 11:43 AM CET