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The Effects of Private Equity-Backing in the European Acquisitions of Unlisted Companies

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4C9AC5ABd01.pdf (191.0Kb)
Date
2010
Dewey
Economie financière
Sujet
Private Equity; Acquisitions; Acquirer Returns; Unlisted Targets
JEL code
G34; G24
Conference name
2010 FMA Annual Meeting
Conference date
10-2010
Conference city
New York
Conference country
États-Unis
URI
https://basepub.dauphine.fr/handle/123456789/5889
Collections
  • DRM : Publications
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Author
Joly, Vanessa
Type
Communication / Conférence
Item number of pages
34
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.

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