The Effects of Private Equity-Backing in the European Acquisitions of Unlisted Companies
Joly, Vanessa (2010), The Effects of Private Equity-Backing in the European Acquisitions of Unlisted Companies, 2010 FMA Annual Meeting, 2010-10, New York, États-Unis
TypeCommunication / Conférence
Conference title2010 FMA Annual Meeting
Conference cityNew York
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Abstract (FR)Using a sample of acquisitions of unlisted firms completed by public companies from 17 Western European countries over the period 2003-2008, this study investigates whether private equity (PE)-backing of acquired firms has an impact on announcement period abnormal returns to acquirers. 12.5% of the unlisted targets are PE-backed. Acquisitions of PE-backed firms are more likely to involve larger acquirers, larger targets relative to acquirer size, and high-tech targets; they are more likely to occur in an unrelated industry and to be partially stock-financed. Of most importance for this study, I find that the presence of PE investors in the targets leads to significantly lower acquirer announcement returns. This effect remains after controlling for a large set of deal and acquirer characteristics. Moreover, these results are robust to the use of a propensity score matching method on multiple deal characteristics and suggest that PE investors increase the negotiating power of target shareholders.
Subjects / KeywordsPrivate Equity; Acquisitions; Acquirer Returns; Unlisted Targets
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