Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81501
Authors: 
Norbäck, Pehr-Johan
Persson, Lars
Tåg, Joacim
Year of Publication: 
2010
Series/Report no.: 
IFN Working Paper 817
Abstract: 
Private equity owned firms have more leverage, more intense compensation contracts, and higher productivity than comparable firms. We develop a theory of buyouts in oligopolistic markets that explains these facts. Private equity firms are more aggressive in inducing restructuring compared to incumbents since they maximize a trade sale price. The equilibrium trade sale price increases in restructuring not only by increasing the profit of the acquirer, but also by decreasing the profits of non-acquiring firms. Predictions on the exit mode and on when private equity firms can outbid incumbents in the market for corporate control are also derived.
Subjects: 
Acquisitions
Buyouts
Buy-to-sell
Buy-to-keep
Leveraged buyouts
Private equity
Take-overs
Temporary ownership
JEL: 
G24
G32
G34
L10
L20
Document Type: 
Working Paper

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