Retail Customer Reactions to Private Equity Acquisitions

62 Pages Posted: 26 Oct 2021 Last revised: 16 Jan 2023

See all articles by Vesa Pursiainen

Vesa Pursiainen

University of St. Gallen; Swiss Finance Institute

Tereza Tykvova

University of St. Gallen - Swiss Institute of Banking and Finance; Swiss Finance Institute

Date Written: October 13, 2022

Abstract

Acquisition announcements by private equity funds are associated with significant reductions in customer visits to target firm outlets, measured using aggregated mobile phone data. These reductions occur in primary but not in secondary buyouts. Customer reviews do not become more negative. Following deal completion, the customer losses are reversed. Thus, the initial decrease is unlikely to be the consequence of operational changes. The decrease in visits is smaller in areas with higher economic connectedness, income, stock market participation, and self-employment rates, and larger in altruistic, Republican-voting and individualistic regions. The decrease is also larger for outlets facing more competition.

Keywords: private equity, buyout, customer reaction, reputation

JEL Classification: D12, G14, G24, G34

Suggested Citation

Pursiainen, Vesa and Tykvova, Tereza, Retail Customer Reactions to Private Equity Acquisitions (October 13, 2022). Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=3949527 or http://dx.doi.org/10.2139/ssrn.3949527

Vesa Pursiainen (Contact Author)

University of St. Gallen ( email )

Swiss Institute of Banking and Finance
Unterer Graben 21
St.Gallen, 9000
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Tereza Tykvova

University of St. Gallen - Swiss Institute of Banking and Finance ( email )

Rosenbergstrasse 52
St. Gallen, CH-9000
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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