Do Private Equity Firms Reduce Product Commercialization?
54 Pages Posted: 5 Dec 2019 Last revised: 10 Dec 2019
Date Written: November 18, 2019
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: Suggested Citation