Harvard Business School
Boston, MA 02163
NBER Working Papers and Publications
|July 2008||Board Interlocks and the Propensity to be Targeted in Private Equity Transactions|
with Toby Stuart: w14189
In this paper, we examine the propensity for U.S. public companies to become targets for private equity-backed, take-private transactions. We consider the characteristics of 483 private equity-backed deals in the 2000-2007 period relative to public companies, and find that, in addition to the financial drivers studied in previous works, board characteristics and director networks are also associated with deal generation. We find that a company that has a director who has had LBO experience through prior board service is ~40% more likely to receive a private equity offer, and that the strength of this effect varies with the influence of the director and the quality of the prior LBO experience. This effect is robust to the most likely alternative explanations and supports the idea that direc...
Published: Journal of Financial Economics Volume 97, Issue 1, July 2010, Pages 174–189