Private Equity Syndication: Agency Costs, Reputation and Collaboration

29 Pages Posted: 13 Oct 2009

See all articles by Miguel Meuleman

Miguel Meuleman

Vlerick Business School; University of Nottingham

Sophie Manigart

Vlerick Business School; Ghent University

Andy Lockett

Nottingham University Business School (NUBS)

Mike Wright

Nottingham University Business School

Date Written: 2008-12

Abstract

Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm.

Suggested Citation

Meuleman, Miguel and Manigart, Sophie and Lockett, Andy and Wright, Mike, Private Equity Syndication: Agency Costs, Reputation and Collaboration (2008-12). Journal of Business Finance & Accounting, Vol. 36, Issue 5-6, pp. 616-644, June/July 2009. Available at SSRN: https://ssrn.com/abstract=1486367 or http://dx.doi.org/10.1111/j.1468-5957.2009.02124.x

Miguel Meuleman (Contact Author)

Vlerick Business School ( email )

Reep 1
Gent, 9000
Belgium
0032(0)92109770 (Phone)
0032(0)92109790 (Fax)

University of Nottingham

University Park
Nottingham, NG8 1BB
United Kingdom

Sophie Manigart

Vlerick Business School ( email )

Reep 1
Ghent, BE-9000
Belgium

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

Andy Lockett

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Mike Wright

Nottingham University Business School ( email )

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

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