Secondary Buyouts: Operating Performance and Investment Determinants
Financial Management, Forthcoming
76 Pages Posted: 22 Mar 2010 Last revised: 20 Jan 2015
Date Written: September 21, 2014
Secondary buyouts represent now over 60% of the overall buyout activity. In this paper we investigate the possible determinants of such a spectacular growth. We show that first-round buyers generate a large and significant abnormal improvement in operating performance. In contrast, SBO operating growth is not different from that of the peer group. Returns to secondary PE investors are positive but significantly lower than those of first round buyers. We test several alternative drivers of SBOs and find that favorable credit market conditions and PE reputation drive secondary investment volume.
Keywords: Secondary Buyout, Private Equity, Financial Crisis
JEL Classification: G01, G24, G34
Suggested Citation: Suggested Citation