543INDEX
academic literature, process for reviewing see literature review
accounting performance, productivity and 477–9
agency costs of free cash flow 320, 332, 475, 509
agency theory: entrepreneurship in MBOs 406; failed companies 186; family firm buyouts 178, 180, 181; hedge funds 367; human resource management (HRM) 458; innovation 375, 378–81; leveraged buyouts (LBOs) 102, 107, 115–16, 375, 378–81, 493–4; performance and 375; private equity 7–8; private equity funds 367
allocation of resources see resource management
Alternative Investment Fund Managers Directive (AIFMD): adoption of 74; alternative investment fund managers (AIFMs) 75; assets under management (AUM) 75; capital requirements for fund managers 78–9; conduct of business rules 76–7; controversies about 74; delegation of functions by EU-based AIFMs 78; depositories 76; employee protection 80–1; EU financial system, protection of 79–80; fraud or malpractice, prevention of 76; impact of provisions generally 78; investor protection 76–7; manager remuneration 77–8; market access (“passport”) 81–2; scope of 75; stakeholder protection 80–1; valuation of private equity funds 77
Arkwright, Richard 41
asset stripping: 1960s and 1970s 29, 43; controversies about 1, 21, 51, 492, 508; frequency of 380
assets: assets under management (AUM) 75; divestment see divestment; financial assistance laws, relaxing of 30
banks: collaboration decisions with PE firms 286–9; lead banks 278; private equity firms in relation 278; syndication networks 278–9, 298–9; and venture capital (VC) 284
Baumol, William 45
behavioral perspectives, overview of 17–18
benchmarking of PE returns 269–72
bondholder wealth transfer hypothesis of PTP transactions 104–5, 107
Bottomley, Horatio 41
bought deals see institutional buyouts (IBOs)
Boulton, Matthew 41
Brazil, PE attractiveness ranking 316–19
Brexit see United Kingdom (UK)
BRICS economies, PE attractiveness rankings 316–19
business failures see failed companies
business risk of PE investment 254
buybacks of shares, leveraged buyouts as 58
buyin-management buyouts (BIMBOs) 101
“buyout”, definition of 419
buyout longevity and post-exit performance: buyout industry classification and 512; buyout size and 512; different types of buyouts 513–14; exit process 510; exits and longevity in relation 509–10; financial performance 516–18; financial performance and PE firm reputation in relation 517–18; long-term 544financial performance 517; market conditions and 513–14; operating performance 514–16; PE backing and 511; PE firm characteristics and 511–12; PE syndication and 512; research methodology 508–9; short-term financial performance 516–17; stock market indexes 515; summary of research 518–24
capital gains: of independent funds 32; taxation of 31
capital markets, information asymmetries 391, 393
capitalism: capital market dominance in business 441; changes in 441; finance-led capitalism, change to 441, 442–5; financialization 441, 450–1; full-employment capitalism, change from 441, 442–3; micro instruments of private equity 445–7; neo-liberalism 441; and private equity 442–5
captive funds: buyouts of 33–4; exit policy 32; length of investment term 32; ownership of 32; yield from investments 32
Centre for Management Buyout Research (CMBOR) 10–11, 37, 90, 187, 478, 484
China: detachment of post-MBO firms from government control 220; distinctive features of MBOs 212; financial performance of MBOs 218–19; history of MBO development 213–14; information asymmetries in MBOs 217; local governments, role of 213, 216–17; MBO research methodology 217–18; organizational performance of MBOs 219–20; ownership concentration by MBOs 220–1; PE attractiveness ranking 316–19; performance of MBO firms 217–21; political control of MBO activity 214; private equity, role of 215–16; privatization 213; reasons for MBO usage 214–15; requirements for research on 212
collaboration decisions: and bank syndication 278–9, 298–9; emerging issues in 294–6; between firms 284–6; between firms and banks 286–9; between firms and investors 279; between firms and targets 279–84; information asymmetries 279, 284, 287, 294; international aspects 290, 299–300; and investor protection 299–300; limited partnerships 279; performance impacts of 290–4; power differentials among prospective buyout participants 296–8; research on 279
commitment risk of PE investment 254
company failures see failed companies
conduct of business rules, AIFMD 76–7
conglomerate firms: diversification discount on shares 92–4; external funding 93; internal funding 89, 93–4; rise and fall of 92
control hypothesis of PTP transactions 103, 107
corporate finance see private equity; private equity funds
corporate governance: changes in 186, 376; emerging economies 308–9; governance engineering 163, 375, 380, 476; leveraged buyouts (LBOs) 492; productivity and 479–80
corporate refocusing see divestment
cumulative abnormal returns (CARs) measurement 113–14
debt merger acquisitions (debt M&As) see leveraged buyouts (LBOs)
decisions on collaboration see collaboration decisions
depositories, AIFMD regulation of 76
development capital, definition of 29
discriminant analysis (DA) 109
diversified firms see conglomerate firms
divestment: academic studies of 90–2; conglomerate firms, rise and fall of 92; in corporate refocusing 89, 94–5; by failed companies 186; information asymmetries 93; MBOs and 89–96; multidivisional form of corporate structure 89; reasons for 92–3; reasons for MBO usage 95
divisional buyouts: resource management 425, 427; studies of 119
due diligence: conduct of 23, 52, 77, 166, 177, 351, 355, 421, 433; costs of 250, 306; definition of 279, 427; hedge funds 355; importance of 17; information on 63; level of 8, 78, 197; leveraged buyouts (LBOs) 64, 65, 134; reports 419; responsibility for 298; review of 127
economic performance, productivity and 477–9
economics see capitalism
efficiency buyouts 406
efficiency measurement, productivity and 480–1
emerging economies: attractiveness for PE investors 306–11; BRICS (Brazil, Russia, India, China, South Africa) 316–19; capital market depth 307–8; control variables 326; corporate governance 308–9; Country 545Attractiveness Index see Private Equity Country Attractiveness Index; data on 321–6; deal opportunities 309–10; dependent variable 321; early-investor disadvantages 306, 319–20; economic activity 307; employment and employee relations 309; entrepreneurial culture 309–10; entry strategies 305; factors for favorable investment environment, identification of 310–11; general partners’ role in investment 306; general sample characteristics 321; growth opportunities 305; human factors 309; independent variables 326; investor protection 308–9; limited partners’ role in investment 306; multivariate analyses 328–31; research methodology 306; research results, interpretation of 330–1; returns, research on 320–1; shift of PE market towards 305; societal factors 309; statistics on 321–6; taxation 308
employment and employee relations: agency theory and 493–4; AIFMD protection of 80–1; average LBO effects 498–500; average pay, LBO effect on 503; different types of buyouts, impact of 500; different types of workers, LBO impact on 500–1, 503–4; emerging economies 309; entrepreneurship theory and 494–5; failed companies 191; future research on LBO impact 504–5; health services 207; human resource management (HRM) 458–62; LBO impact on 124, 492–505; MBO impact on 20–1; PE impact on 355, 449–50; redundancy, regulation and use of 447; summary of studies of LBO effect on 496–8; trade unions, recognition of 448–9; wages effects of buyouts 502–4; see also human resource management (HRM)
entrepreneurial buyouts 408
entrepreneurial companies: data on 338; empirical research on 338–45; exit performance 343–5; growth equity 337; information asymmetries 337; investment size and valuation 342–3; regression analysis of 341–5; statistics on 338–41; venture capital 336, 336–8
entrepreneurial culture in emerging economies 309–10
entrepreneurial finance in UK c.1770–1975 41–3
entrepreneurial mindset 406
entrepreneurship in MBOs: agency theory and 406; buyout failures 408; buyouts with entrepreneurial focus 406; efficiency buyouts 406; entrepreneurial buyouts 408; entrepreneurial growth 410–11; entrepreneurial mindset 406; entrepreneurship theory and 406; evidence on entrepreneurship in buyouts 410–12; exporting and 411–12; family firms 408; future research on 412–14; innovation and 412; managerial mindset 407; PE involvement 409; revitalization buyouts 408
entrepreneurship theory: entrepreneurship in MBOs 406; failed companies 186; innovation 375, 380–1; leveraged buyouts (LBOs) 9–10, 375, 380–1, 494–5; performance and 375
equity finance see private equity; private equity funds
Europe: buyout market 508; controversies about LBOs 51; first wave of large deals 32; investment impact of buyouts 390, 398; leveraged buyouts (LBOs) 100, 134–6; mezzanine finance 136; PE regulation and policy 366; trends in MBOs 3–7; vendor sources 31
European Union (EU): AIFMD see Alternative Investment Fund Managers Directive (AIFMD); financial system, protection of 79–80; private equity regulation and policy 74–82; UK withdrawal (Brexit) see United Kingdom (UK)
exit: by captive funds 32; entrepreneurial companies 343–5; by independent funds 32; post-exit performance see post-exit performance; routes 6; short term see asset stripping
failed buyouts: case study 451–3; entrepreneurship in MBOs 408
failed companies: agency theory and 186; case studies 193–5; divestment by 186; employment and employee relations post-buyout 191; entrepreneurship theory and 186; failure of buyouts from 192; future research on 195–6; general characteristics of buyouts 187–90; information asymmetries 190, 191, 192; loan notes 189; MBO or MBI 189; mezzanine finance 189; parts of companies, buyouts to save 187, 193–4; PE fund involvement 190–1; PE influence on 530–41; PE-backed buyouts from insolvent parents 194–5; post-buyout performance 191–3; pre-pack deals 190, 195; recession and insolvency 186, 187; sector distribution of buyouts 187; theoretical approaches to buyouts 186
family firm buyouts: agency theory and 178, 180, 181; bargaining power in buyout negotiations 162–3, 166; buyout process phases 177–81; doing the deal, phase of 177; “external” family succession, definition of 147; 546family firm perceptions 161–2, 166; family succession, alternatives to 176; family succession, problem of 147; future research on 167; gaps in research 164–7; influences on outcome 180; information asymmetries 150, 159–61, 166, 178, 179, 180; limited research on 173, 174; literature review 149–67; market for 150, 166; negotiation behaviors 178; negotiations 177–81; PE investor perceptions 161, 166; post-buyout professionalization of firm 181–3; post-deal perspectives 180; post-deal phase 177; pre-deal phase 177; preference for MBO or MBI 176, 178; reasons for 176; resource management 425, 429–31; suitability of PE 148; valuation of firm 180; value creation 163–4, 167; see also family firms
family firms: assumptions about 174; buyouts see family firm buyouts; definition of 147; differences from non-family firms 174–7; disputes within 175; as dominant business ownership model 173; entrepreneurship in MBOs 408; “external” family succession, definition of 147; innovation by 174; longevity of 173; ownership as permanent objective 175; ownership structures 175; psychological ownership of 175; separation of ownership and management 175; size of 174; succession, issues about 147, 176; variety of 174
finance see private equity; private equity funds
finance purchases see institutional buyouts (IBOs)
financial assistance laws, relaxing of 30
financial crisis of 2007–2008 see global financial crisis of 2007–2008
financial engineering 375
financial performance: buyout longevity and post-exit performance 516–18; Chinese MBOs 218–19; health services 206–7
financially distressed companies, PE influence on 530–41
forward mergers 55
France: investment impact of buyouts 396, 397; MBO market size 5; PE regulation and policy 366; private equity regulation and policy 74
fraud, prevention under AIFMD 76
free cash flow: agency costs of 320, 332, 475, 509; definition of 8, 378; high level of 279, 287, 320, 406; limits on 466; misuse of 229, 390, 392, 396; as reason for PTP transactions 101; reduction of 44; theory of 55, 92, 93, 94, 103, 107, 241
funds see private equity funds
Galbraith, John K. 43
general partners (GPs): investment in emerging economies 306; role of 2, 227; unfunded commitments of 36
Germany: MBO market size 5; private equity regulation and policy 74; second wave of MBOs 1
global financial crisis of 2007–2008 36
globalization, rise of 35
governance see corporate governance
growth companies see entrepreneurial companies
health services: care quality effects of PE 207–8; conceptual framework for research on 200; differences from other businesses 200–2; efficiency effects of PE 206; employee well-being effects of PE 207; evidence from related literatures on PE 203–4; financial performance effects of PE 206–7; future research on 209; information asymmetries 202; innovation effects of PE 206; multidimensional performance of PE in 203; nursing homes, evidence on PE in 203–6; organizational performance effects of PE 206–7; PE market generally 199–200; requirements for research on 203–6; shareholder approach to research on 202; stakeholder approach to research on 202–3, 204
hedge funds: agency perspective on 367; as alternative investment type 348; controversies about 350–1; distinctive features of 348; due diligence 355; investor activism 352–3; PE funds in relation 348–68; performance 350–1; regulation of 355–67; research interest in 349–50; socio-economic perspective on 367
historical perspectives 11–13, 29–39, 40–8
human resource management (HRM): agency theory and 458; change management 461–2; definition of 456; different types of buyouts 465–6; employment relations 458–62; future research on 467–9; high-performance work systems (HPWS) 457–8; importance of HR issues in buyouts 457; industrial relations 464; institutional context 467; investors’ country of origin in relation to 466–7; pay systems 460–1; strategy for 457–8; training provision 458–60; work relations 462–4
547incentive realignment hypothesis of PTP transactions 102, 107
independent funds: capital gains 32; exit policy 32; length of investment term 32; ownership of 32
India: investment impact of buyouts 397; PE attractiveness ranking 316–19
indirect share buybacks, leveraged buyouts as 58
Indonesia, PE attractiveness ranking 316–19
industrial relations see employment and employee relations; trade unions
information asymmetries: capital markets 391, 393; Chinese MBOs 217; collaboration decisions 279, 284, 287, 294; divestment 93; entrepreneurial companies 337; failed companies 190, 191, 192; family firm buyouts 150, 159–61, 166, 178, 179, 180; health services 202; initial public offerings (IPOs) 516, 517; leveraged buyouts (LBOs) 107, 119; venture capital (VC) 517
initial public offerings (IPOs): advantages of private equity 148; as exit from MBOs 6; information asymmetries 516, 517; post-exit operating performance 514–15
innovation: agency theory and 375, 378–81; entrepreneurship theory and 375, 380–1; family firms 174; future research on 377, 383–5; health services 206; leveraged buyouts (LBOs) and 375–86; management innovation 377, 382–3; MBO impact on 21; technological innovation 377, 382–3; see also entrepreneurial companies
insolvencies see failed companies
institutional buyouts (IBOs) 35, 101, 355, 393
interest, taxation of 34
interest rates, IRR calculation 251–2, 266–7
investment: cash flow sensitivities 394–6; effects of buyouts on different types of investments 397–8; future research on 398–401; indirect evidence on PE firms and financing constraints 396–7; length of term 32–3; leveraged buyouts (LBOs) 390; overinvestment 390; PE controversies 390; PE investor role in buyouts 391–3; post-buyout realignment 390; returns on see returns; varieties of PE investor involvement 392–3; yield 32
investment risk of PE investment 254–5
investor protection: AIFMD regulation of 76–7; collaboration decisions and 299–300; emerging economies 308–9
investor-led buyouts (IBOs), definition of 2
Italy: leveraged buyouts (LBOs) 12, 55–66; PE regulation and policy 366
Jensen, Michael 22, 90, 92, 103, 128, 132, 186, 215, 320, 475, 476, 493, 535
jobs see employment and employee relations
junk bonds crisis 229
labor see employment and employee relations; human resource management (HRM); trade unions
legal perspectives, overview of 11–13
leverage risk of PE investment 254
leveraged buyouts (LBOs): agency theory and 102, 107, 115–16, 375, 378–81, 493–4; behavioral theory and 9; bidder competition 118–19; bondholder wealth transfer hypothesis 104–5; “bootstrapping acquisition” 99; buyin-management buyouts (BIMBOs) 101; case studies 125–7; categories of 100–1; collaboration decisions see collaboration decisions; control hypothesis 103, 107; controversies about 51, 56–60; corporate governance 492; cumulative abnormal returns (CARs) measurement 113–14; debt, acquisition of 54–5; definition of 2, 99, 101, 375, 492; discriminant analysis (DA) of 109; divisional buyouts, studies of 119; due diligence 64, 65, 134; duration-oriented PTP literature 109, 128–31; empirical PTP literature, theoretical framework of 108–31; employment, effects on 124, 492–505; entrepreneurship theory and 9–10, 375, 380–1, 494–5; European trends in 134–6; financial engineering 375; financial structure of 53; and firm performance 64; firms under private ownership, quantitative studies on 122–5; first wave of MBOs 132–3; forward mergers 55; free cash flow hypothesis 92, 103, 107; future research on 136–8; governance engineering 375; impact-oriented PTP literature 109, 112–21; incentive realignment hypothesis 102, 107; as indirect share buybacks 58; information asymmetries 107, 119; and innovation & investment 375–86; institutional buyouts (IBOs) as type of 101; intent-oriented PTP literature 108, 109–12; international PTP trends 131–6; investment, impact on 390; investment process 53–5; legality of 56–64; longevity 513; management buyins (MBIs) as type of 100; management buyouts (MBOs) as type of 100; management input by private 548equity funds 64; merger of newco and target company 55; new company (newco), establishment of 53–4; operational engineering 375; premiums analysis 115; process-oriented PTP literature 109, 119–27; public-to-private (PTP) transactions 99, 100; purchase of target company shares 55; reasons for PTP transactions 101–8; regulation and policy in Italy 12, 55–66; reverse LBOs (RLBOs) 101, 125; reverse mergers 55; second wave of MBOs 110, 133–4; secondary initial public offerings (SIPOs) 101; shareholder-related agency costs hypotheses 102, 115–16; takeover defense hypothesis 106, 107; target company value, activities to increase 375; tax benefit hypothesis 105–6, 107, 117; taxation 61–2; transaction costs hypothesis 106, 107, 117; UK and US trends in 132–4; undervaluation hypothesis 107, 107–8, 117–18; wealth gains from, sources of 99, 101; wealth transfer hypothesis 104–5, 107, 116–17
limited liability partnerships, taxation of 31–2
limited partners (LPs): co-investment with private equity funds 38; collaboration decisions with PE firms 279; investment in emerging economies 306; limited partnership model 443; role of 2, 227; unfunded commitments of 36
liquidity risk of PE investment 254
literature review: identification of literature 150; identification of search terms 149; methodology 149; process 149; review, consistency of 150; selection criteria for scope of review 149; selection of databases 150
longevity see performance
malpractice, prevention under AIFMD 76
management: agency theory and 7; behavioral theory and 8; change management 461–2; entrepreneurship theory and 9; fiduciary duty 1, 7, 268; innovation see innovation; management input by private equity funds 30, 35, 64; managerial mindset 407; private equity firm research implications 241–4; remuneration, AIFMD regulation of 77–8; see also human resource management (HRM); resource management
management buyins (MBIs): buyin-management buyouts (BIMBOs) 101; definition of 2, 101, 393; employment and employee relations 500; family firms see family firm buyouts; as LBO type 100; longevity 513; process 354–5; rise of 35; trends in 4
management buyouts (MBOs): concluding comments about 21–3; controversies about 1; current study content and structure 11–19; current study contributions 15–17; definition of 1, 2, 101, 212, 393, 475; emergence of 1, 90–2; exit from see exit; first wave of 1, 3, 4, 7, 30, 132–3, 228, 508; impact of see performance; introduction to 1–2; management led MBOs, decline of 35; process 354; second wave of 1, 3, 4, 7, 34–5, 110, 133–4, 229; terminology 2, 29; theories of 7–10; trends in 3–7
management innovation see innovation
Mexico, PE attractiveness ranking 316–19
mezzanine finance 7, 45, 136, 189, 229
Netherlands: human resource management (HRM) 458, 459; post-buyout resource management 423–7
Newcomen, Thomas 41
Nigeria, PE attractiveness ranking 316–19
nursing homes see health services
operating performance: buyout longevity and post-exit performance 514–16; productivity and 477–85
operating risk of PE investment 254
operational engineering 375
partners see general partners (GPs); limited partners (LPs)
pay see remuneration
PE see private equity
PE-backed firms 148
pension funds: benchmarking of PE returns 269–72; PE buyout fund returns 272; PE returns 267–9
performance: accounting performance 477–9; agency theory and 375; analysis of returns, level of 37–8; collaboration decision impacts on 290–4; concluding comments about 21–3; current study contributions 18–19; economic performance 477–9; employment and employee relations 20–1; entrepreneurial companies 343–5; entrepreneurship theory and 375; financial performance see financial performance; first wave of MBOs 31; funds returns 20; health services 203, 206–7; importance of 487; innovation see innovation; leveraged buyouts (LBOs) 64; longevity of buyouts 21, 508–24; operating performance 477–85, 514–16; persistence 262–7; post-exit performance see post-exit performance; productivity see productivity; profitability 20; returns 31, 37–8, 248–74
Philippines, PE attractiveness ranking 316–19
political economy see capitalism
portfolio firms 148
post-MBO firms, limited life 2
private equity: advantages over IPOs 148; agency theory and 7–8; as alternative investment type 348; business model 495; capitalism and 441–53; controversies about 1, 508; current study contributions 15–17; development of PE industry 228–30, 248; distinctive features of 349; emerging economies and see emerging economies; funds 2; historical perspectives on 29–39; importance of 1; investment risk 254–5; investor-led buyouts (IBOs) 2; length of investment term 32–3; micro instruments of 445–7; PE-backed firms 148; portfolio firms 148; regulation and policy 51–73; terminology usage 29; transactions with or without PE backing 2; trends in 3–7; vendor sources see vendor sources; venture capital distinguished from 148, 278, 336–8; see also private equity funds; venture capital
Private Equity Country Attractiveness Index: allocation recommendations 315–16; BRICS (Brazil, Russia, India, China, South Africa) 316–19; building of 311–14; countries covered by 313; country coverage 312–13; early-investor disadvantages 319–20; historic comparison 315–16; key drivers, assessment of 311–12; key drivers, disaggregation of 312; key emerging economies 316–19; ranking 314–15; weighting scheme 312–13
private equity firms: banks in relation 278; collaboration decisions see collaboration decisions; development of PE industry 228–30, 248; differentiation between 240; diversified firms with focused portfolio groups 235–6; financial structure emphasis 231; general partners (GPs) see general partners (GPs); limited partners (LPs) see limited partners (LPs); long-term equity position niche firms 233–5; management implications of research on 241–4; movements between strategic positions 238–40; portfolio firm scope 231; positioning of, theoretical background for 230–1; public policy implications of research on 244–5; research methodology 227–8; short-term diversified efficiency-oriented niche firms 236–8; short-term efficiency niche firms 232–3; strategic configuration model of 231–2; strategy, definition of 227; theoretical implications of research on 240–1
private equity funds: agency perspective on 367; appropriate measure of performance 251–3; benchmarking of PE returns by pension funds 269–72; boom of 2005–2007 35–6; business risk 254; bust of 2007–2008 36; capital gains 32; capital requirements, AIFMD regulation of 77–9; captive funds see captive funds; co-investment with limited partners 38; commitment risk 254; controversies about 351–2; current structure of market 37; cyclicality and performance 256–8; deal flow 35; definition of 443; establishment as limited partnerships 2; globalization 35; hedge funds in relation 348–68; independent funds see independent funds; initiation of transactions 35; investment risk 254–5; investor activism 353–5; IRR calculation 251–2, 266–7; IRR/PME comparison 266–7; leverage risk 254; liquidity risk 254; management input by 30, 35, 64; operating risk 254; pension fund returns from 267–72; performance 351–2; performance in future 272–4; performance measurement 250–5; performance of 255–62; performance over time 266–7; persistence of performance 262–7; public and PE performance compared 258–61; public market equivalent (PME) calculation 252–3, 266–7; recent research on performance 256–62; recovery after global financial crisis 36; regulation of 355–67; research interest in 349–50; returns 20, 31, 37–8, 248–74; sector specialization by 35; socio-economic perspective on 367; and stock market indexes 261–2; structural risk 254; unfunded commitments of 36; valuation of companies still in fund portfolios 253–4; valuation risk 255; yield from investments 32
private nursing homes see health services
productivity: and accounting performance 477–9; different types of buyouts 483–7; and economic performance 477–9; efficiency measurement 480–1; firm-level analysis 482–3; future research on 487–8; governance and 479–80; importance of 487; MBO impact on 20, 475–88; and operating performance 477–85; sector-level analysis 481–2
profitability, MBO impact on 20
550public market equivalent (PME) calculation 252–3, 266–7
public policy implications of private equity firm research 244–5
public-to-private (PTP) transactions see leveraged buyouts (LBOs)
receivership buyouts, resource management 425, 433–4
recession and insolvency see failed companies
redundancy, regulation and use of 447
regulatory perspectives 11–13, 51–73
remuneration: AIFMD regulation of 77–8; LBO impact on 492–505; pay systems 460–1
resource management: across different buyout types 425, 434–6; adjustments in resource allocation 418; bundling of resources 424, 426, 428, 430, 432, 434, 435; and buyout strategy changes 420–1; case studies 428–9; divisional buyouts 425, 427; family firm buyouts 425, 429–31; importance of 418; leveraging of resources 424, 426, 428, 430, 432, 434, 436; models of 419, 423–7; orchestration of resources in buyout strategy 423, 425, 427, 429, 431, 433, 434; and post-buyout management changes 421–2; and post-buyout organizational changes 422–3; receivership buyouts 425, 433–4; secondary buyouts (SBOs) 425, 431–2; strategy for, components of 423; structuring of resources 423, 425, 428, 430, 432, 434, 435; see also human resource management (HRM)
returns: cumulative abnormal returns (CARs) measurement 113–14; emerging economies 320–1; MBO impact on 20; pension fund returns from PE fund investments 267–72; performance 31, 37–8, 248–74; reduction 248–74
reverse mergers 55
revitalization buyouts 408
risk: early investment in emerging economies 306, 319–20; PE investments 254–5
Russia, PE attractiveness ranking 316–19
secondary buyouts (SBOs): buyout longevity and post-exit performance 515–16; definition of 4; as dominant buyout type 420; employment and employee relations 500; as exit from MBOs 6; resource management 425, 431–2
secondary initial public offerings (SIPOs) 101
share buybacks, leveraged buyouts as 58
share premiums analysis 115
shareholder approach to research 202
shareholder-related agency costs hypotheses of PTP transactions 102, 107, 115–16
shares of conglomerate firms, diversification discount 92–4
Smith, Adam 102
sources of deals see vendor sources
South Africa, PE attractiveness ranking 316–19
sovereign wealth funds 348
stakeholder approach to research 202–3, 204
state owned enterprises (SOEs) see China
stock market indexes: buyout longevity and post-exit performance 515; PE funds and 261–2
strategic entrepreneurship theory see entrepreneurship theory
“stripping and flipping” see asset stripping
structural risk of PE investment 254
Sweden, employment and employee relations 498, 503
takeover defense hypothesis of PTP transactions 106, 107
taxation: emerging economies 308; of interest 34; leveraged buyouts (LBOs) 61–2; limited liability partnerships 31–2; “loop holes” 34; tax benefit hypothesis of PTP transactions 105–6, 107, 117
technological innovation see innovation
trade unions: and human resource management (HRM) 464; recognition of 448–9
training provision for employees 458–60
transaction costs hypothesis of PTP transactions 106, 107, 117
Turkey, PE attractiveness ranking 316–19
undervaluation hypothesis of PTP transactions 107–8, 117–18
United Kingdom (UK): academic studies of MBOs 90–2; Brexit 74; buyout market 508; buyout of captive funds 33; Centre for Management Buyout Research (CMBOR) 10–11, 37, 90, 187, 478, 484; controversies about LBOs 51; controversies about MBOs 2; corporate refocusing 94; emergence of MBOs 90–2; employment and employee relations 447, 448–50, 498, 503; entrepreneurial finance c.1770–1975 41–3; failed buyout, 551case study 451–3; failed companies see failed companies; finance-led capitalism and financialization, transition to 441–5; financial assistance laws, relaxing of 30; first wave of MBOs 30, 43–5, 508; full-employment capitalism 442; global financial crisis of 2007–2008 45–8; history of MBO development 40–8; human resource management (HRM) 457, 458, 459, 462, 463, 464, 467; investment impact of buyouts 390, 395, 396, 397, 398; leveraged buyouts (LBOs) see leveraged buyouts (LBOs); limited liability partnerships 31; loan notes 189; management input by private equity funds 30; MBO market size 5, 7; mezzanine finance 136, 189; micro instruments of private equity 445–7; PE regulation and policy 366; post-exit performance of firms see buyout longevity and post-exit performance; private equity case studies 447–53; private equity firm strategies 236; private equity regulation and policy 74, 444–5; redundancy, regulation and use of 447; returns 31; second wave of MBOs 1; taxation 31; terminology usage 29; trade unions, recognition of 448–9; unfunded commitments of private equity funds 36; US experience compared 45; value appropriation from portfolio firms 445–7
United States (US): buyout market 508; controversies about LBOs 51; controversies about MBOs 1; corporate refocusing 94; emergence of MBOs 1; employment and employee relations 498, 503; entrepreneurial companies 336–46; first wave of large deals 32; first wave of MBOs 30; hedge funds 351, 355; human resource management (HRM) 459, 467; investment impact of buyouts 390, 396, 398; leveraged buyouts (LBOs) see leveraged buyouts (LBOs); PE firm strategies 227–45; PE fund performance and returns 248–74; PE regulation and policy 366; private nursing homes see health services; taxation 31, 32; terminology usage 29; UK experience compared 45; vendor sources 31; venture capital (VC) 508
valuation of private equity funds, AIFMD regulation of 77
valuation risk of PE investment 255
value appropriation from portfolio firms 445–7
value creation, model of 423
value of target companies, LBO activities to increase 375
vendor sources: changes in 4; current study contributions 13–15; first wave of MBOs 31
venture capital (VC): as alternative investment type 348; bank syndication and 284; definition of 29, 336, 444; dominance of 508; early examples of 41; first wave of MBOs 30, 43; history of MBO development 40; information asymmetries 517; private equity distinguished from 148, 278, 336–8; rebranding as private equity 33; separation from buyout markets 45; use of term 29
Watt, James 41
wealth transfer hypothesis of PTP transactions 104–5, 107, 116–17
work relations see employment and employee relations; human resource management (HRM)
workers see employment and employee relations; human resource management (HRM); trade unions
Wright, Mike 90
yield from investments 32