The Influence of Leveraged Buyouts on Target Firms' Competitors
SAFE Working Paper No. 99
38 Pages Posted: 13 Jan 2014 Last revised: 1 May 2015
Date Written: April 30, 2015
This paper analyzes the influence Leveraged Buyouts (LBOs) have on the operating performance of the LBO target companies’ direct competitors. A unique and hand-collected data set on LBOs in the United States in the period 1985-2009 allows us to analyze the effects different restructuring activities as part of the LBO have on the competitors’ revenues. These restructuring activities include changes to leverage, governance, or operating business, as well as M&A activities of the LBO target company. We find that although LBOs itself have a negative influence on competitors’ revenue growth, some restructuring mechanisms might actually benefit competing companies.
Keywords: Product Market Competition, Peers, LBOs, Restructuring
JEL Classification: D43, G23, G24, G34
Suggested Citation: Suggested Citation