Public-to-Private Transactions: Lbos, Mbos, Mbis and Ibos
CentER Discussion Paper No. 2005-98
55 Pages Posted: 5 Sep 2005
Date Written: August 2005
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: Suggested Citation