The Heterogeneity of Private Equity Firms and its Impact on Post-Buyout Performance: Evidence from the United Kingdom
Cressy, R., Malipiero, A., Munari, F. (2007), “Playing to their strengths. Evidence that specialization in the Private Equity industry confers competitive advantage”, Journal of Corporate Finance, Special Issue on “Private equity, Legeraged Buyout and Corporate Governance”,13(4): 647-669
27 Pages Posted: 16 Jan 2006 Last revised: 9 May 2013
Date Written: January 1, 2006
This paper examines the impact of the degree of specialization of private equity firms on the post-buyout performance of acquired companies. We establish theoretically the likely effects of three different dimensions of specialization: the affiliation of the PE firm (independent vs. captive) together with its industry and stage focus. We then test our hypotheses on a sample of 89 UK buyouts, with a control group of 89 private companies matched by size and industry. In line with the predictions of the resource-based view of the firm, our results show that buyouts by more specialized PE firms tend to have higher post-buyout profitability levels.
Keywords: buyouts, private equity, performance, specialization
JEL Classification: G24, G34
Suggested Citation: Suggested Citation