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Secondary Buyouts: Operating Performance and Investment Determinants

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  • Stefano Bonini

Abstract

type="main"> Secondary buyouts (SBOs) now represent over 60% of the overall buyout activity. In this paper, I investigate the possible determinants of such spectacular growth. I find that first round buyers generate a large and significant abnormal improvement in operating performance. In contrast, SBO operating growth is not different from that of its peer group. Returns to secondary private equity (PE) investors are positive, but significantly lower than those of first round buyers. I examine several alternative drivers of SBOs and find that favorable credit market conditions and PE reputation drive secondary investment volume.

Suggested Citation

  • Stefano Bonini, 2015. "Secondary Buyouts: Operating Performance and Investment Determinants," Financial Management, Financial Management Association International, vol. 44(2), pages 431-470, June.
    • Handle: RePEc:bla:finmgt:v:44:y:2015:i:2:p:431-470
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    Cited by:

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    2. Hege, Ulrich & Lovo, Stefano & Slovin, Myron B. & Sushka, Marie E., 2018. "Divisional buyouts by private equity and the market for divested assets," Journal of Corporate Finance, Elsevier, vol. 53(C), pages 21-37.
    3. Cumming, Douglas & Deloof, Marc & Manigart, Sophie & Wright, Mike, 2019. "New directions in entrepreneurial finance," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 252-260.
    4. Giovannetti, Andrea & Pipic, Denis, 2023. "Shaking hands with common foes: Clique premium and information diffusion in private equity networks," International Review of Financial Analysis, Elsevier, vol. 86(C).
    5. Benjamin Hammer & Heiko Hinrichs & Bernhard Schwetzler, 2018. "Does culture affect the performance of private equity buyouts?," Journal of Business Economics, Springer, vol. 88(3), pages 393-469, May.
    6. Hammer, Benjamin & Knauer, Alexander & Pflücke, Magnus & Schwetzler, Bernhard, 2017. "Inorganic growth strategies and the evolution of the private equity business model," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 31-63.
    7. Jenkinson, Tim & Sousa, Miguel, 2015. "What determines the exit decision for leveraged buyouts?," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 399-408.

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