Jerry X. Cao
Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
NBER Working Papers and Publications
|October 2006||The Performance of Reverse Leveraged Buyouts|
with Josh Lerner: w12626
Reverse leveraged buyouts (RLBOs) have received increased public scrutiny but attracted little systematic study. We collect a comprehensive sample of 496 RLBOs between 1980 and 2002 and examine three- and five-year stock performance of these offerings. RLBOs appear to consistently outperform other IPOs and the stock market as a whole, with economically and statistically meaningful positive returns. There is no evidence of a deterioration of returns over time, despite the growth of the buyout market: RLBOs performed strongly in the late 1980s, the mid-1990s, and the 2000s. Large RLBOs that are backed by private equity firms with more capital under management perform better. We also find the so-called quick flips--when private equity firms sell off an investment within a year after acquisiti...
Published: Cao, Jerry & Lerner, Josh, 2009.
"The performance of reverse leveraged buyouts,"
Journal of Financial Economics,
Elsevier, vol. 91(2), pages 139-157, February.
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