Retail Customer Reactions to Private Equity Acquisitions

Vesa Pursiainen and Tereza Tykvova
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Vesa Pursiainen: University of St. Gallen; Swiss Finance Institute

No 23-05, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Acquisition announcements by private equity funds are associated with significant reductions in customer visits to target firm outlets, measured using aggregated mobile phone data. These reductions occur in primary but not in secondary buyouts. Customer reviews do not become more negative. Following deal completion, the customer losses are reversed. Thus, the initial decrease is unlikely to be the consequence of operational changes. The decrease in visits is smaller in areas with higher economic connectedness, income, stock market participation, and self-employment rates, and larger in altruistic, Republican-voting and individualistic regions. The decrease is also larger for outlets facing more competition.

Keywords: private equity; buyout; customer reaction; reputation (search for similar items in EconPapers)
JEL-codes: D12 G14 G24 G34 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2023-01
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