Fare Thee Well? An Analysis of Buyout Funds' Exit Strategies

Financial Management, Forthcoming

47 Pages Posted: 22 Jun 2012 Last revised: 17 Jun 2014

See all articles by Sven Furth

Sven Furth

Goethe University Frankfurt - Chair of Banking and Finance; Goethe University Frankfurt - Faculty of Economics and Business Administration

Christian Rauch

American University of Sharjah

Date Written: June 17, 2014

Abstract

This paper analyzes exit strategies of buyout funds in their portfolio companies following Initial Public Offerings. We use a data set of 222 buyout-backed IPOs in the United States between 1999 and 2008 including hand-collected data about each exit process to draw up a detailed road map of buyout investors’ divestment processes. Using this data, we document timing and aggressiveness of the exit strategies, and analyze to which degree a multitude of possible determinants influence the choice for a given exit strategy. Our results show that buyout funds stay invested in their portfolio companies for a substantial period of time after the IPO, and that the choice for a given exit strategy depends not only on characteristics of each respective portfolio company, but also on the financial success of the deal from the perspective of the buyout investor.

Keywords: Private Equity, IPO, Insider Trading, Buyout

JEL Classification: G23, G24, G34, G12, G15

Suggested Citation

Furth, Sven and Rauch, Christian, Fare Thee Well? An Analysis of Buyout Funds' Exit Strategies (June 17, 2014). Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2088883 or http://dx.doi.org/10.2139/ssrn.2088883

Sven Furth

Goethe University Frankfurt - Chair of Banking and Finance ( email )

Grüneburgplatz 1
P.O. Box 11932
Frankfurt (Main), 60323
Germany

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Grueneburgplatz 1
Frankfurt am Main, D-60323
Germany

Christian Rauch (Contact Author)

American University of Sharjah ( email )

P.O. Box 26666
University City
Sharjah, Greater Dubai Area
United Arab Emirates

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