Retail Customer Reactions to Private Equity Acquisitions
Proceedings of Paris December 2021 Finance Meeting EUROFIDAI - ESSEC
64 Pages Posted: 26 Oct 2021 Last revised: 2 Feb 2023
Date Written: October 13, 2022
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: Suggested Citation