Irrevocable Commitments, Going Private and Private Equity

19 Pages Posted: 15 Aug 2007

See all articles by Mike Wright

Mike Wright

Nottingham University Business School

Charlie Weir

Robert Gordon University - Aberdeen Business School

Andrew Burrows

Nottingham University Business School (NUBS)

Abstract

This paper adds to growing interest in public to private buy-outs and mechanisms to ensure bid success. Using a unique, hand-collected dataset of 155 public to private buy-outs we provide one of the first examinations of the determinants of irrevocable commitments. Irrevocable commitments involve undertakings given by existing shareholders to agree to sell their shares to the bidder before the bid to take the company private is announced. We find that, for management buy-outs, the level of irrevocable commitments is increased by the bid premium, the reputation of the private equity backer and board shareholdings. The level of irrevocable commitments is reduced by rumours of a takeover bid and bid value. We therefore find evidence that management and private equity firms' activity prior to the bid's announcement can have an important impact on the process of going private.

Suggested Citation

Wright, Mike and Weir, Charles and Burrows, Andrew John, Irrevocable Commitments, Going Private and Private Equity. European Financial Management, Vol. 13, No. 4, pp. 757-775, September 2007. Available at SSRN: https://ssrn.com/abstract=1006915 or http://dx.doi.org/10.1111/j.1468-036X.2007.00382.x

Mike Wright (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5257 (Phone)
+44 115 951 5204 (Fax)

Charles Weir

Robert Gordon University - Aberdeen Business School ( email )

Garthdee Road
RGU
Aberdeen AB10 7QE
United Kingdom
0044 1224 263800 (Phone)
0044 1224 263838 (Fax)

Andrew John Burrows

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
12
Abstract Views
948
PlumX Metrics