The Performance of Reverse Leveraged Buyouts

Jerry Cao and Josh Lerner

No 12626, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Reverse leveraged buyouts (RLBOs) have received increased public scrutiny but attracted little systematic study. We collect a comprehensive sample of 496 RLBOs between 1980 and 2002 and examine three- and five-year stock performance of these offerings. RLBOs appear to consistently outperform other IPOs and the stock market as a whole, with economically and statistically meaningful positive returns. There is no evidence of a deterioration of returns over time, despite the growth of the buyout market: RLBOs performed strongly in the late 1980s, the mid-1990s, and the 2000s. Large RLBOs that are backed by private equity firms with more capital under management perform better. We also find the so-called quick flips--when private equity firms sell off an investment within a year after acquisition--underperform.

JEL-codes: G23 G24 G34 (search for similar items in EconPapers)
Date: 2006-10
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Cao, Jerry & Lerner, Josh, 2009. "The performance of reverse leveraged buyouts," Journal of Financial Economics, Elsevier, vol. 91(2), pages 139-157, February.

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Journal Article: The performance of reverse leveraged buyouts (2009)
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