Public-to-Private Transactions: Lbos, Mbos, Mbis and Ibos

ECGI - Finance Working Paper No. 94/2005

CentER Discussion Paper No. 2005-98

55 Pages Posted: 5 Sep 2005

See all articles by Tomas Simons

Tomas Simons

McKinsey & Co. Inc. - Amsterdam Office

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: August 2005

Abstract

This paper shows that a vibrant and economically important public-to-private market has reemerged in the US, UK and Continental Europe, since the second half of the 1990s. The paper shows recent trends and investigates the motives for public-to-private and LBO transactions. The reasons for the potential sources of shareholder wealth effects during the transaction period are examined: a distinction is made between tax benefits, incentive realignment, transaction costs savings, stakeholder expropriation, takeover defenses and corporate undervaluation. The paper also attempts to relate these value drivers to the post-transaction value and to the duration of the private status. Finally, the paper draws some conclusions about whether or not public-to-private transactions are useful devices for corporate restructuring.

Keywords: Public-to-private transactions, Going-private deals, Management buyouts, Leveraged buyouts, Management buyins

JEL Classification: G30, G32, G34, G38

Suggested Citation

Simons, Tomas and Renneboog, Luc, Public-to-Private Transactions: Lbos, Mbos, Mbis and Ibos (August 2005). ; CentER Discussion Paper No. 2005-98. Available at SSRN: https://ssrn.com/abstract=796047 or http://dx.doi.org/10.2139/ssrn.796047

Tomas Simons

McKinsey & Co. Inc. - Amsterdam Office ( email )

Amstel 344
Amsterdam, 1017 AS
Netherlands
0031 205513009 (Phone)
0031 205515009 (Fax)

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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