Operating Performance of Management Buyouts: Non-PTP Dimension of Acquisitions

Yıl 2021, Sayı: 116, 9 - 36, 03.10.2021

Lokman Tütüncü

https://doi.org/10.33203/mfy.686858

Öz

This paper investigates value creation in a unique sample of 412 private firm and divestment management buyouts. Performance of buyouts is tested within Jensen’s agency framework, which posits mitigation of agency conflicts through buyout. Results indicate that last decade management buyouts are characterised by low leverage, high growth and moderate profitability. Post-transaction performance is superior to comparable non-buyouts, however buyouts begin to outperform control firms prior to acquisition and pre-to-post transaction performance improvements are minimal. Leverage is a significant driver of performance despite being low and private equity sponsors generate little additional value after controlling for selection bias.

Anahtar Kelimeler

Management buyout, non-PTP buyouts, divestment, , private equity

Yönetim Satınalmalarında Faaliyet Performansı: PTP Harici Satınalmalar Boyutu

Öz

Bu çalışma 412 özel şirket yönetim satınalmasında değer yaratılmasını incelemektedir. Satınalmaların performansı vekalet çatışmalarının satınalma ile hafifletilmesini öngören Jensen’in vekalet teorisi çerçevesinde test edilmiştir. Sonuçlar son on yıldaki yönetim satınalmalarının düşük kaldıraç, yüksek büyüme ve ortalama bir karlılık ile karakterize edildiğini göstermektedir. Satınalma sonrası performans diğer şirketlere nazaran yüksek olmakla birlikte, performanstaki iyileşme satınalma öncesinde başlamaktadır ve işlem sonrası performans iyileşmeleri minimaldir. Düşük olmasına rağmen kaldıraç performansın anlamlı bir belirleyicisidir ve özel sermaye sponsorlarının seçilim yargısı düzeltilmesinden sonra düşük düzeyde değer yarattıkları görülmektedir.

Anahtar Kelimeler

Yönetim satınalması, PTP harici satınalmalar, özel sermaye

Kaynakça

• Barber, B., & Lyon, J. (1996). Detecting abnormal operating performance: The empirical power and specification of test statistics. Journal of Financial Economics, 41(3), 359-399.
• Bonini, S. (2015). Secondary buyouts: operating performance and investment determinants. Financial Management, 44(2), 431-470.
• Boucly, Q., Sraer, D., & Thesmar, D. (2011). Growth LBOs. Journal of Financial Economics, 102(2), 432-453.
• CMBOR. (2010). Centre for Management Buyout Research Quarterly Review, Winter 2009/2010.
• Cohn, J.B., Mills, L.F., & Towery, E.M. (2014). The evolution of capital structure and operating performance after leveraged buyouts: evidence from US corporate tax returns. Journal of Financial Economics, 111(2), 469-494.
• Cotter, J.F., & Peck, S.W. (2001). The structure of debt and active equity investors: The case of the buyout specialist. Journal of Financial Economics, 59(1), 101–147.
• Cressy, R., Malipiero, A., & Munari, F. (2007). Playing to their strengths? Evidence that specialization in the private equity industry confers competitive advantage. Journal of Corporate Finance, 13(4), 647-669.
• Desbrieres, P., & Schatt, A. (2002). The impacts of LBOs on the performance of acquired firms: The French case. Journal of Business Finance and Accounting, 29(5), 695-729.
• Fama, E., & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 321-325.
• Fenn, G. W., Liang, N., & Prowse, S. (1997). The economics of the private equity market. Staff Study no. 168, Board of Governors of the Federal Reserve System.
• Gao, X., Ritter, J.R., & Zhu, Z. (2013). Where have all the IPOs gone? Journal of Financial and Quantitative Analysis, 48(6), 1663-1692.
• Gompers, P.A. (1996). Grandstanding in the venture capital industry. Journal of Financial Economics, 42(1), 133-156.
• Gompers, P., Kovner, A., Lerner, J., et al., (2008). Venture capital investment cycles: the impact of public markets. Journal of Financial Economics, 87(1), 1-23.
• Guo, S., Hotchkiss, E.S., & Song, W. (2011). Do buyouts (still) create value? Journal of Finance, 66(2), 479-517.
• Holthausen, D., & Larcker, D. (1996). The financial performance of reverse leveraged buy-outs. Journal of Financial Economics, 42(3), 293-332.
• Howorth, C., Westhead, P., & Wright, M. (2004). Buyouts, information asymmetry and family management dyad. Journal of Business Venturing, 19(4), 509-534.
• Jelic, R. (2011). Staying power of UK buy-outs. Journal of Business Finance and Accounting, 38(7), 945-986.
• Jelic, R., & Wright, M. (2011). Exits, performance and late stage private equity: The case of UK MBOs. European Financial Management, 17(3), 560-593.
• Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323-329.
• Jensen, M. (1989). Eclipse of the public corporation. Harvard Business Review, 67(5), 61-74.
• Jensen, M. (2010). Active investors, LBOs, and the privatization of bankruptcy. Journal of Applied Corporate Finance, 22(1), 34-44.
• Kaplan, S. (1989). The effects of management buyouts on operating performance and value. Journal of Financial Economics, 24(2), 217-254.
• Katz, S.P. (2009). Earnings quality and ownership structure: The role of private equity sponsors. The Accounting Review, 84(3), 623-658.
• Meuleman, M., Amess, K., Wright, M., et al., (2009). Agency, strategic entrepreneurship and the performance of private equity backed buyouts. Entrepreneurship Theory and Practice, 33(1), 213-239.
• Opler, T.C. (1992). Operating performance in leveraged buyouts: Evidence from 1985-1989. Financial Management, 21(1), 27-34.
• Perry, S., & Williams, T. (1994). Earnings management preceding management buyout offers. Journal of Accounting and Economics, 18(2), 157-179.
• Renneboog, L., Simons, T., & Wright, M. (2007). Why do public firms go private in the UK? Journal of Corporate Finance, 13(4), 591-628.
• Smith A. (1990). Corporate ownership structure and performance: The case of management buyouts. Journal of Financial Economics, 27(1), 143-164.
• Strömberg, P. (2008). The new demography of private equity. The Global Impact of Private Equity Report, 3-26.
• Weir, C., Jones, P., & Wright, M. (2015). Public-to-private transactions, private equity and performance in the UK: an empirical analysis of the impact of going private. Journal of Management and Governance, 15(1), 91-112.
• Wright, M., Robbie, K., Steve, T., et al., (1994). Longevity and the life cycle of management buyouts. Strategic Management Journal, 15(3), 215-227.