Do Private Equity Firms Reduce Product Commercialization?

54 Pages Posted: 5 Dec 2019 Last revised: 10 Dec 2019

Date Written: November 18, 2019

Abstract

Private equity (PE) firms reduce product commercialization in their Leveraged Buyout (LBO) investments. This reduction is associated with a product focus in the product commercialization strategy of the LBO. Using a sample of LBOs against a control sample of firms that failed to close the LBO transaction and using trademarks as a measure of product commercialization, I find that PE firms reduce trademark filings, but they accompany it with the reduction in the number of product classes which is a sign of product focus. The effect is opposite when managerial incentives are not aligned. The level of deal leverage does not affect PE firms' product commercialization strategy; neither does PE firms' experience.

Keywords: Private Equity, Product Commercialization, Innovation, Leverage Buyouts

JEL Classification: G34, G23, L11

Suggested Citation

Khoja, Moazzam, Do Private Equity Firms Reduce Product Commercialization? (November 18, 2019). Available at SSRN: https://ssrn.com/abstract=3490280 or http://dx.doi.org/10.2139/ssrn.3490280

Moazzam Khoja (Contact Author)

University of Houston ( email )

Houston, TX
United States

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