Money Chasing Deals and Deals Chasing Money - The Impact of Supply and Demand on Buyout Performance

Oliver Gottschalg () and D. Zipser
Additional contact information
Oliver Gottschalg: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: This paper analyzes the impact of differences in supply of and demand for private equity financing on the performance of buyouts. Using a unique and proprietary sample of 684 buyout investments in North America and Europe, we show that buyout performance (a) decreases when large volumes of private equity commitments are looking for suitable acquisition targets and (b) increases when macroeconomic conditions are such that demand for private equity financing is high. These findings remain unchanged if we control for the idiosyncrasies of individual investment periods, transaction size, holding period and industry sector of individual investment and the vintage year, the size or the age of the investing private equity fund. Our results support the view that the market for buyout target companies is not necessarily efficient, but that instead acquisition prices (and thereby transaction performance) depend on the competition by a limited number of private equity fund managers for a limited number of attractive investment opportunities.

Keywords: Money Chasing Deals; Impact of Supply and Demand; Buyout Performance; Buyout (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in 2006

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00120988

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().