Bank Networks and Buyout Financing

Posted: 5 Jun 2017 Last revised: 9 Oct 2020

See all articles by Yan Alperovych

Yan Alperovych

emlyon business school

Anantha Divakaruni

University of Bergen

Sophie Manigart

Vlerick Business School; Ghent University

Miguel Meuleman

Vlerick Business School; University of Nottingham

Date Written: August 1, 2018


We investigate whether syndication networks among banks influence the financing of leveraged buyouts (LBO). We find that lead banks serve as important intermediaries between the supply (banks in an LBO loan syndicate) and demand (targets and private equity (PE) firms) sides of LBO financing. They rely on their syndication network to reduce information asymmetries between the parties involved, especially when prior bank-borrower relationships are weak or non-existent. Banks that are more central within their network are more likely to be chosen as lead arrangers since they are able to form larger syndicates and provide more debt. In addition, more central banks are preferred as lead arrangers because their influential network position allows them to finance LBOs under terms that are favorable to both targets and PE firms. After controlling for the simultaneous determination of LBO financing terms, we find that a one-standard-deviation increase in bank centrality reduces LBO loan spreads by an average of 22 basis points, representing a 1.65% increase in PE equity returns for an average loan size of $363 million. These findings suggest that bank networks play a crucial role in facilitating LBO financing and that borrowers are able to perceive the relative position of banks within these syndication networks.

Keywords: Networks; Leveraged Buyout; Network Centrality; Bank; Private Equity; Loan Syndication

JEL Classification: G20, G21, G23, G24

Suggested Citation

Alperovych, Yan and Divakaruni, Anantha and Manigart, Sophie and Meuleman, Miguel and Meuleman, Miguel, Bank Networks and Buyout Financing (August 1, 2018). Available at SSRN: or

Yan Alperovych (Contact Author)

emlyon business school ( email )

23 Avenue Guy de Collongue
Écully, 69130

Anantha Divakaruni

University of Bergen ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007

Sophie Manigart

Vlerick Business School ( email )

Reep 1
Ghent, BE-9000

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000

Miguel Meuleman

Vlerick Business School ( email )

Reep 1
Gent, 9000
0032(0)92109770 (Phone)
0032(0)92109790 (Fax)

University of Nottingham

University Park
Nottingham, NG8 1BB
United Kingdom

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