Private Equity Firm Experience and Buyout Vendor Source: What is Their Impact on Efficiency?

European Journal of Operational Research, Vol. 228, 2013

Posted: 28 Mar 2015 Last revised: 5 Jun 2017

See all articles by Yan Alperovych

Yan Alperovych

EMLYON Business School; EMLYON Business School - Research Centre for Entrepreneurial Finance

Kevin Amess

Nottingham University Business School

Mike Wright

Imperial College London

Date Written: January 24, 2013

Abstract

Using a dataset comprising 88 Private Equity (PE) backed Leveraged Buyouts (LBOs) completed and exited during the period 1999-2008, this study sheds new light on the impact of buyout vendor source and PE investor experience on post-buyout efficiency during the first 3 years after the transaction. There are three main findings. First, we observe increases in post-buyout efficiency over time, although LBOs from different vendor source differ in terms of post-transaction efficiency levels and improvement trajectories. Private and divisional buyouts are more efficient than the average. Divisional buyouts show higher efficiency improvements than private and secondary buyouts. Secondary buyouts remain below the average. Second, multivariate analyses suggest a positive and significant effect of PE firm experience on post-buy-out efficiency. Finally, the observed efficiency patterns seem to be convex, suggesting the major improvements happen in the first 2 years after the transaction.

Keywords: Dynamic data envelopment analysis, Private equity, Management buyouts, Divisional private and secondary buyouts, Efficiency

JEL Classification: G24, G34

Suggested Citation

Alperovych, Yan and Amess, Kevin and Wright, Mike, Private Equity Firm Experience and Buyout Vendor Source: What is Their Impact on Efficiency? (January 24, 2013). European Journal of Operational Research, Vol. 228, 2013. Available at SSRN: https://ssrn.com/abstract=2585560

Yan Alperovych (Contact Author)

EMLYON Business School ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

EMLYON Business School - Research Centre for Entrepreneurial Finance ( email )

23 Avenue Guy de Collongue
Ecully, 69132
France

Kevin Amess

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/business/lizka1.html

Mike Wright

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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