Do Buyouts (Still) Create Value

摘要: We examine how leveraged buyouts from the most recent wave of public to private transactions created value. Buyouts completed between 1990 and 2006 are more con? servatively priced less levered than their predecessors 1980s. For deals with post-buyout data available, median market- risk-adjusted returns pre (post-) buyout capital invested 72.5% (40.9%). In contrast, gains in operating per? formance either comparable or slightly exceed those observed for benchmark firms. Increases industry valuation multiples realized tax benefits in? creasing leverage, while private, each economically as important explaining returns. The (LBO) 1980s was an phenomenon well studied by academics practitioners. recession early 1990s, however, brought that activity end, many later period defaulted. Nearly 15 years later, pace LBO reached new record levels, renewing questions about whether these create value.1 A substantial body empirical work based on transac? tions supports notion Several studies show large performance following buyout; theories attribute reduced agency costs through dis? ciplining effects leverage better governance (monitoring financial