TY  - JOUR
AU  - Guo,Shourun
AU  - Hotchkiss,Edie S.
AU  - Song,Weihong
TI  - Do Buyouts (Still) Create Value?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14187
PY  - 2008
Y2  - July 2008
UR  - http://www.nber.org/papers/w14187
L1  - http://www.nber.org/papers/w14187.pdf
N1  - Author contact info:
Shourun Guo
Boston College
E-Mail: guosa@bc.edu

Edie Hotchkiss
Boston College
Fulton Hall, Room 330
Chestnut Hill, MA  02467
Tel: 508-561-4433
Fax: 617-552-0431
E-Mail: hotchkis@bc.edu

Weihong Song
University of Cincinnati
Tel: 5135567041
E-Mail: weihong.song@uc.edu
M3  - presented at "New World of Private Equity Conference", April 4-5, 2008
AB  - This paper examines whether, and how, leveraged buyouts from the most recent wave of public to private transactions created value. For a sample of 192 buyouts completed between 1990 and 2006, we show that these deals are somewhat more conservatively priced and lower levered than their predecessors from the 1980s. For the subsample of deals with post-buyout data available, median market adjusted returns to pre- and post-buyout capital invested are 78% and 36%, respectively.  In contrast, gains in operating performance are either comparable to or slightly exceed those observed for benchmark firms.  We examine the relative contribution of several potential determinants of returns; in addition to gains in operating performance, returns are strongly related to increases in industry valuation multiples.  Overall, our results provide insights into how transactions from the most recent wave of leveraged buyouts created value.
ER  -