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

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  • Lokman Tütüncü

    (Bulent Ecevit University)

Abstract

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.

Suggested Citation

  • Lokman Tütüncü, 2021. "Operating Performance of Management Buyouts: Non-PTP Dimension of Acquisitions," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 36(116), pages 9-36, October.
    • Handle: RePEc:acc:malfin:v:36:y:2021:i:116:p:9-36
    DOI: https://doi.org/10.33203/mfy.686858
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    Keywords

    Management buyout; non-PTP buyouts; divestment; private equity;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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