Insight private equity

Andrej Gill and Nikolai Visnjic

No 23, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: We are able to shed light on the black box of restructuring tools private equity investors use to improve the operational performance of their portfolio companies. By building on previous work considering performance evaluation of PE backed companies, we analyze whether private equity improves operating efficiency and which of the typical restructuring tools are the main performance drivers. Using a set of over 300 international leveraged buyout transactions of the last thirty years, we find that while there is vast improvement in operational efficiency, these gains vary considerably. Our top performing transactions are subject to strong equity incentives, frequent asset restructuring and tight control by the investor. Furthermore, investors' experience has a positive influence while financial leverage has no influence on operational performance.

Keywords: private equity; leveraged buyouts; active shareholders; corporate restructuring; operational performance (search for similar items in EconPapers)
JEL-codes: G23 G24 G32 G34 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:23

DOI: 10.2139/ssrn.2281229

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