48 Pages Posted: 2 Nov 2007
Date Written: August 2007
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 both leverage and pricing in buyouts. These results are consistent with a view in which the availability of financing impacts booms and busts in the private equity market.
Keywords: Private equity, capital structure, buyouts
Suggested Citation: Suggested Citation
Axelson, Ulf and Jenkinson, Tim and Weisbach, Michael S. and Strömberg, Per, Leverage and Pricing in Buyouts: An Empirical Analysis* (August 2007). Swedish Institute for Financial Research Conference on The Economics of the Private Equity Market. Available at SSRN: https://ssrn.com/abstract=1027127 or http://dx.doi.org/10.2139/ssrn.1027127