Leveraged Buyouts: A Survey of the Literature

Luc Renneboog, Cara Vansteenkiste

Research output: Working paperDiscussion paperOther research output

757 Downloads (Pure)

Abstract

This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages86
Volume2017-015
Publication statusPublished - 15 Mar 2017

Publication series

NameCentER Discussion Paper
Volume2017-015

Fingerprint

Stakeholders
Leveraged buyouts
Wealth transfer
Theoretical framework
Agency costs
Cost savings
Going private
Tax
Transaction costs
Leveraged buyout
Value creation
Buy-out
Takeover defenses
Undervaluation
Literature review

Keywords

  • publit-to-private transactions
  • going-private deals
  • private equitiy
  • management buyout
  • leveraged buyout
  • management buy-in
  • MBO
  • LBO
  • reverse LBO

Cite this

Renneboog, L., & Vansteenkiste, C. (2017). Leveraged Buyouts: A Survey of the Literature. (CentER Discussion Paper; Vol. 2017-015). Tilburg: CentER, Center for Economic Research.
Renneboog, Luc ; Vansteenkiste, Cara. / Leveraged Buyouts : A Survey of the Literature. Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper).
@techreport{573ebdd5a72041108ed1e7932a4d1cb4,
title = "Leveraged Buyouts: A Survey of the Literature",
abstract = "This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.",
keywords = "publit-to-private transactions, going-private deals, private equitiy, management buyout, leveraged buyout, management buy-in, MBO, LBO, reverse LBO",
author = "Luc Renneboog and Cara Vansteenkiste",
year = "2017",
month = "3",
day = "15",
language = "English",
volume = "2017-015",
series = "CentER Discussion Paper",
publisher = "CentER, Center for Economic Research",
type = "WorkingPaper",
institution = "CentER, Center for Economic Research",

}

Renneboog, L & Vansteenkiste, C 2017 'Leveraged Buyouts: A Survey of the Literature' CentER Discussion Paper, vol. 2017-015, CentER, Center for Economic Research, Tilburg.

Leveraged Buyouts : A Survey of the Literature. / Renneboog, Luc; Vansteenkiste, Cara.

Tilburg : CentER, Center for Economic Research, 2017. (CentER Discussion Paper; Vol. 2017-015).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Leveraged Buyouts

T2 - A Survey of the Literature

AU - Renneboog, Luc

AU - Vansteenkiste, Cara

PY - 2017/3/15

Y1 - 2017/3/15

N2 - This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.

AB - This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.

KW - publit-to-private transactions

KW - going-private deals

KW - private equitiy

KW - management buyout

KW - leveraged buyout

KW - management buy-in

KW - MBO

KW - LBO

KW - reverse LBO

M3 - Discussion paper

VL - 2017-015

T3 - CentER Discussion Paper

BT - Leveraged Buyouts

PB - CentER, Center for Economic Research

CY - Tilburg

ER -

Renneboog L, Vansteenkiste C. Leveraged Buyouts: A Survey of the Literature. Tilburg: CentER, Center for Economic Research. 2017 Mar 15. (CentER Discussion Paper).