Private equity buyouts & firm exporting in crisis periods: Exploring a new channel

Paul Lavery, Marina-Eliza Spaliara and Holger Görg

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper examines whether private equity (PE)-backed companies are better able to remain active on export markets compared to similar non-PE firms, when hit by a negative shock. We look at two such recent shocks, namely the global financial crisis (GFC) and COVID-19 pandemic. We construct two matched samples, one for each crisis period, to assess the resilience of exporting under PE ownership in recessionary periods. We then explore how improvements in working capital management allow PE-backed firms to engage in international activities and maintain their export relationships relative to similar, non-PE-backed firms. Our results show that the export activities of PE-backed firms are significantly more resilient to the effects of the GFC but less pronounced following COVID-19. PE investment enhances working capital management, which in turn improves the persistence in export markets at the onset of the crises.

Keywords: Private equity buyouts; exporting; working capital; recessions (search for similar items in EconPapers)
JEL-codes: F14 G01 G32 G34 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-cfn and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkie:306864

DOI: 10.1016/j.jcorpfin.2024.102686

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