The Performance of Leveraged Buyout-Backed Initial Public Offerings in the UK
49 Pages Posted: 7 Apr 2008
This paper investigates the long-term stock price performance of initial public offering (IPO) firms in the United Kingdom that were previously owned by leveraged buyout (LBO) funds. A sample of 128 LBO-backed IPOs and 1,121 non-LBO-backed IPOs between 1990 and 2006 is analysed for the long-term performance of these offerings. The analysis suggests that LBO-backed IPOs beat the stock market and outperform non-LBO-backed IPOs. The analysis identifies factors driving outperformance, most significantly the percentage of share capital held by the buyout group after the offering.
Keywords: initial public offerings (IPOs), private equity, leveraged buyouts (LBOs), reverse leveraged buyouts (RBLOs), stock price performance, long-term event study, United Kingdom (UK)
JEL Classification: G12, G14, G15, G24
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