Private Equity and Management Buy-outs

Edited by Mike Wright, Professor of Financial Studies and Director, Centre for Management Buy-out Research, Nottingham University Business School, UK, Visiting Professor, Erasmus University Rotterdam, The Netherlands and Editor, Journal of Management Studies and Hans Bruining, Rotterdam School of Management, Erasmus University Rotterdam, The Netherlands

As private equity markets have gained in importance worldwide over the last decade there has been a growing debate about the role of private equity in the firm and society at large. Private equity firms are facing different challenges, notably: increased pressure to be more transparent in their value creation and governance role with regard to shareholders and employees of the buy-out firm; increased pressure to be more transparent about the short- and long-term economic and social effects, for instance their role in the upside potential of buy-outs and impact on human resources management; increased pressure to be transparent about the determinants of exit strategies; increased pressure to test the acceptability of financial leverage in the financial structures of buy-outs; increased importance of their intermediary role as adviser to vendors and buyers in family buy-outs; increased pressure to combine financial expertise with technological and management control expertise in buy-out firms. For the first time the broad issues now facing private equity and buy-outs are brought together through the contributions in this volume.

Private Equity and Management Buy-outs provides a balanced view of the often polarized private equity debate. This careful and objective analysis of the presence of private equity in buy-out firms reviews the effects of this ownership transfer in terms of firm performance and survival, thus placing private equity in a broader context of implications for value creation. The analysis provides an overview of international trends in private equity and develops a conceptual framework for understanding the heterogeneity of private equity deals. Systematic evidence from large-scale studies of private equity and buy-outs are used to shed light on short- and longer-term economic and social effects. For the first time the broader scope of the key issues now facing private equity and buyouts are brought together in the contributions herein. The book includes highlights such as:
• empirical evidence on a special organizational form of private equity
• examination of backed buy-outs (perspectives from strategy, finance, HRM, and management accounting)
• discussion on the level of PE involvement
• challenging further debate on economical and social key issues regarding policy implications and future research agenda.

‘A selection of very interesting perspectives on private equity from a collection of leading academics.’ – Guy Fraser-Sampson, author of Private Equity as an Asset Class

‘This book is a timely and important collection of papers on the financial and real effects of private equity. It is crucial that policymakers know the evidence on these transactions, as opposed to the folklore that permeates the popular press. This comprehensive and penetrating collection of studies frames and answers the most important questions policymakers are asking about private equity.’ – Donald Siegel, University of California, Riverside, US

Contributors include: K. Amess, N. Bacon, R. Ball, M. Bonnet, P. Boselie, H. Bruining, T. Buck, A. Burrows, L. Busenitz, D. Citron, J. Dial, I. Filatotchev, R. Harris, R. Hoskisson, R. Jelic, M. Kitamura, E. Nikoskelainen, L. Renneboog, F. Rippington, B. Saadouni, L. Scholes, D.S. Siegel, T. Simons, C. Weir, P. Westhead, M. Wright

Table Of Contents
PART I - INTRODUCTION
1 Private equity and management buy-outs: international trends, evidence and policy implications

PART II - THEORETICAL PERSPECTIVES
2 Entrepreneurial growth through privatization: the upside of management buyouts

PART III - SOURCES OF BUY-OUT
3 Why do public firms go private in the UK? The impact of private equity investors, incentive realignment and undervaluation
4 Irrevocable commitments, going private and private equity
5 Information sharing, price negotiation and management buy-outs of private family-owned firms

PART IV - ENTREPRENEURSHIP AND VALUE CREATION
6 Management control systems and strategy change in buy-outs
7 Entrepreneurial orientation in management buy-outs and the contribution of venture capital
8 Management buyouts and restructuring Japanese corporations

PART V -  IMPACT OF BUY-OUTS
9 Assessing the impact of management buyouts on economic efficiency: plant-level evidence from the United Kingdom
10 Post-privatization effects of management and employee buy-outs
11 The impact of business ownership change on employee relations: buy-outs in the UK and the Netherlands
12 The wage and employment effects of leveraged buyouts in the UK

PART VI - INVESTMENT REALIZATION: SUCCESS AND FAILURE
13 The impact of corporate governance mechanisms on value increase in leveraged buyouts
14 Performance of private to public MBOs: the role of venture capital
15 Secured creditor recovery rates from management buy-outs in distress

More Information
Website of the Book