Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109639
Authors: 
Amess, Kevin
Stiebale, Joel
Wright, Mike
Year of Publication: 
2015
Series/Report no.: 
DICE Discussion Paper 184
Abstract: 
The paper analyses the impact of private equity (PE) backed leveraged buyouts (LBOs) on innovation output (patenting). Using a sample of 407 UK deals we find that LBOs have a positive causal effect on patent stock and quality-adjusted patent stock. Our results imply a 6% increase in quality-adjusted patent stock three years after the deal. The increase in innovation activity is concentrated among private-to-private transactions with a 14% increase in the quality-adjusted patent stock. Further analysis supports the argument that PE firms facilitate the relaxation of financial constraints. We also rule out alternative explanations for portfolio firms' higher patenting activity. Our findings suggest that PE firms do not promote short-term cost-cutting at the expense of entrepreneurial investment opportunities with a long-term payoff.
Subjects: 
private equity
leveraged buyout
entrepreneurial buyouts
innovation
JEL: 
D22
G32
G34
L26
ISBN: 
978-3-86304-183-0
Document Type: 
Working Paper

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