Public-to-Private Transactions: LBOs, MBOs, MBIs and IBOs
McKinsey & Co. Inc. - Amsterdam Office
Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)
ECGI - Finance Working Paper No. 94/2005
CentER Discussion Paper No. 2005-98
This paper shows that a vibrant and economically important public-to-private market has reemerged in the US, UK and Continental Europe, since the second half of the 1990s. The paper shows recent trends and investigates the motives for public-to-private and LBO transactions. The reasons for the potential sources of shareholder wealth effects during the transaction period are examined: a distinction is made between tax benefits, incentive realignment, transaction costs savings, stakeholder expropriation, takeover defenses and corporate undervaluation. The paper also attempts to relate these value drivers to the post-transaction value and to the duration of the private status. Finally, the paper draws some conclusions about whether or not public-to-private transactions are useful devices for corporate restructuring.
Number of Pages in PDF File: 55
Keywords: Public-to-private transactions, Going-private deals, Management buyouts, Leveraged buyouts, Management buyins
JEL Classification: G30, G32, G34, G38working papers series
Date posted: September 5, 2005
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