Insight Private Equity

40 Pages Posted: 12 Oct 2012

See all articles by Andrej Gill

Andrej Gill

Johannes Gutenberg University Mainz

Nikolai Visnjic

Goethe University Frankfurt

Multiple version iconThere are 2 versions of this paper

Date Written: September 26, 2012

Abstract

We build on previous work on operational performance evaluation of private equity portfolio companies as we are able to at least partially decrypt the black box consisting of restructuring tools these investors use and the corresponding impact on their portfolio companies. Beyond answering whether private equity improves operating efficiency we figure out which of the typical restructuring tools drive operating efficiency. Using a set of over 300 international leveraged buyout transactions in the last thirty years we find that while there is vast improvement in operational efficiency these gains vary considerably. Our top performing transactions are subject to strong equity incentives, frequent asset restructuring and tight control by the investor. Furthermore, investors experience has a positive and financial leverage a negative influence on operational performance.

Keywords: Private Equity, Active Shareholders, Leveraged Buyouts, Operational Performance, Corporate Restructuring

Suggested Citation

Gill, Andrej and Visnjic, Nikolai, Insight Private Equity (September 26, 2012). Available at SSRN: https://ssrn.com/abstract=2160376 or http://dx.doi.org/10.2139/ssrn.2160376

Andrej Gill

Johannes Gutenberg University Mainz ( email )

Saarstr. 21
Jakob Welder-Weg 4
Mainz, 55122
Germany

Nikolai Visnjic (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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