Leveraged Buyouts: A Survey of the Literature

90 Pages Posted: 23 Jan 2017 Last revised: 11 Mar 2017

See all articles by Luc Renneboog

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance

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Date Written: January 1, 2017


This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in shareholder-related agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeds that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.

Keywords: Public-to-private transactions, Going-private deals, Private equity, Management buyout, Leveraged buyout, Management buyin, MBO, LBO, reverse LBO

JEL Classification: G3, G32, G34, G38

Suggested Citation

Renneboog, Luc and Vansteenkiste, Cara, Leveraged Buyouts: A Survey of the Literature (January 1, 2017). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 492/2017, Available at SSRN: https://ssrn.com/abstract=2896653 or http://dx.doi.org/10.2139/ssrn.2896653

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

Cara Vansteenkiste

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052

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