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Asset sales and the role of buyers: strategic buyers versus private equity

Ulrich Hege (), Stefano Lovo, Myron B. Slovin and Marie E. Sushka

MPRA Paper from University Library of Munich, Germany

Abstract: We model bidding behavior and the interaction of private equity and strategic buyers in corporate asset sales. Private equity bidding and in turn seller gains, and type and time of exit, are determined by private equity's ability to enhance the asset's value. Our empirical results show excess returns to sellers are greater for sales to private equity than strategic buyers. Seller gains in private equity deals are related to subsequent increases in asset values and type and time of exit. Value increases during private equity ownership significantly exceed those of benchmark firms.

Keywords: Private equity; asset sales; restructuring; corporate auctions; secondary buyouts (search for similar items in EconPapers)
JEL-codes: G34 G32 (search for similar items in EconPapers)
Date: 2009-09, Revised 2012-02
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