Abstract

http://ssrn.com/abstract=1344023
 
 

References (26)



 
 

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Leverage and Pricing in Buyouts: An Empirical Analysis


Ulf Axelson


London School of Economics; Swedish Institute for Financial Research (SIFR)

Per Strömberg


Swedish House of Finance

Tim Jenkinson


University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Michael S. Weisbach


Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

February 15, 2009

EFA 2009 Bergen Meetings Paper

Abstract:     
This paper provides an empirical analysis of the financial structure of large recent buyouts. We collect detailed information of the financings of 153 large buyouts (averaging over $1 billion in enterprise value). We document the manner in which these important transactions are financed. Buyout leverage is cross-sectionally unrelated to the leverage of matched public firms, and is largely driven by other factors than what explains leverage in public firms. In particular, the economy-wide cost of borrowing seems to drive leverage. Prices paid in buyouts are related to the prices observed for matched firms in the public market, but are also strongly affected by the economy-wide cost of borrowing. These results are consistent with a view in which the availability of financing impacts booms and busts in the private equity market.

Number of Pages in PDF File: 53

Keywords: Private equity, capital structure, leveraged buyouts

JEL Classification: G24, G32, G34

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Date posted: February 19, 2009  

Suggested Citation

Axelson, Ulf and Strömberg, Per and Jenkinson, Tim and Weisbach, Michael S., Leverage and Pricing in Buyouts: An Empirical Analysis (February 15, 2009). EFA 2009 Bergen Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1344023 or http://dx.doi.org/10.2139/ssrn.1344023

Contact Information

Ulf Axelson
London School of Economics ( email )
United Kingdom
Swedish Institute for Financial Research (SIFR) ( email )
Drottninggatan 89
SE-113 59 Stockholm, SE-113 60
Sweden
Per Stromberg (Contact Author)
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm
Sweden

Tim Jenkinson
University of Oxford - Said Business School ( email )
Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288916 (Phone)
+44 1865 288831 (Fax)
HOME PAGE: http://www.sbs.oxford.edu/timjenkinson
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Michael S. Weisbach
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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