Advanced

Secondary Buyouts

Maassen, Marnick LU and Ramsén, Simon (2016) BUSN89 20161
Department of Business Administration
Abstract
This paper examines the effects of a Private Equity (PE) firm’s specialized investment strategy on the post-secondary buyout (SBO) operating performance of the portfolio company. SBOs are financial transactions in which both the buyer and seller are PE firms. The rise of SBOs has raised several concerns regarding value creation in these transactions. Previous research found that the returns of SBOs are significantly lower than primary buyouts (PBOs). Segmentation of the lead PE firm can generate insight which transactions create value. Practitioners found that specialization has positive effects on operating profitability in PBOs. Our study contributes to existing literature by examining the portfolio company’s post-SBO performance with... (More)
This paper examines the effects of a Private Equity (PE) firm’s specialized investment strategy on the post-secondary buyout (SBO) operating performance of the portfolio company. SBOs are financial transactions in which both the buyer and seller are PE firms. The rise of SBOs has raised several concerns regarding value creation in these transactions. Previous research found that the returns of SBOs are significantly lower than primary buyouts (PBOs). Segmentation of the lead PE firm can generate insight which transactions create value. Practitioners found that specialization has positive effects on operating profitability in PBOs. Our study contributes to existing literature by examining the portfolio company’s post-SBO performance with regards to a PE firm’s specialization strategy based on industry and geographic region. The sample in this study contains 115 SBOs of UK-based portfolio companies during the period 2007 to 2012. We find that industry specialization enhances post-SBO operating profitability whereas a specialized focus on geographic region does not improve post-SBO profitability. Additionally, we find no statistically significant results regarding a specialized investment strategy on post-SBO turnover growth. (Less)
Please use this url to cite or link to this publication:
author
Maassen, Marnick LU and Ramsén, Simon
supervisor
organization
alternative title
A Specialized Strategy of the Private Equity Firm affecting the post-SBO Operating Performance of the Portfolio Company
course
BUSN89 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
Secondary Buyouts, Operating Performance, Private Equity, Specialization, Value Creation Potential
language
English
id
8875644
date added to LUP
2016-08-22 12:51:43
date last changed
2016-08-22 12:51:43
@misc{8875644,
  abstract     = {This paper examines the effects of a Private Equity (PE) firm’s specialized investment strategy on the post-secondary buyout (SBO) operating performance of the portfolio company. SBOs are financial transactions in which both the buyer and seller are PE firms. The rise of SBOs has raised several concerns regarding value creation in these transactions. Previous research found that the returns of SBOs are significantly lower than primary buyouts (PBOs). Segmentation of the lead PE firm can generate insight which transactions create value. Practitioners found that specialization has positive effects on operating profitability in PBOs. Our study contributes to existing literature by examining the portfolio company’s post-SBO performance with regards to a PE firm’s specialization strategy based on industry and geographic region. The sample in this study contains 115 SBOs of UK-based portfolio companies during the period 2007 to 2012. We find that industry specialization enhances post-SBO operating profitability whereas a specialized focus on geographic region does not improve post-SBO profitability. Additionally, we find no statistically significant results regarding a specialized investment strategy on post-SBO turnover growth.},
  author       = {Maassen, Marnick and Ramsén, Simon},
  keyword      = {Secondary Buyouts,Operating Performance,Private Equity,Specialization,Value Creation Potential},
  language     = {eng},
  note         = {Student Paper},
  title        = {Secondary Buyouts},
  year         = {2016},
}