The Effects of the Specialization of Private Equity Firms on Their Exit Strategy

Journal of Business Finance and Accounting (Forthcoming)

Posted: 22 Oct 2016

See all articles by Damiana Rigamonti

Damiana Rigamonti

Aarhus University - School of Business and Social Sciences

Elena Cefis

University of Bergamo - Department of Economics; Utrecht University - Tjalling C. Koopmans Research Institute

Michele Meoli

University of Bergamo

Silvio Vismara

University of Bergamo

Date Written: September 1, 2016

Abstract

We investigate how industry and stage specialization of Private Equity (PE) firms affect the likelihood to exit investments by means of trade sales, Initial Public Offerings (IPOs), or Secondary Buyouts (SBOs). Our empirical analysis relies on competing risks models. Using a sample of 818 Leveraged Buyouts (LBOs) by US and European PE firms over the period 2000-2015, we find that both industry and stage specializations of PEs increase the likelihood to exit via IPO, whereas only industry specialization positively affects the likelihood of divesting through a trade sale. Finally, SBOs are more likely for non-specialized investors.

Keywords: Private Equity, Exit Strategy, Specialization, LBOs, Competing Risks

JEL Classification: G24, G30

Suggested Citation

Rigamonti, Damiana and Cefis, Elena and Meoli, Michele and Vismara, Silvio, The Effects of the Specialization of Private Equity Firms on Their Exit Strategy (September 1, 2016). Journal of Business Finance and Accounting (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2855782

Damiana Rigamonti (Contact Author)

Aarhus University - School of Business and Social Sciences ( email )

Fuglesangs Allé 4 - Aarhus BSS - Dep. of Econ. and
Aarhus V, 8210
Denmark

Elena Cefis

University of Bergamo - Department of Economics ( email )

via dei Caniana 2
Bergamo, 24127
Italy

HOME PAGE: http://www.elena-cefis.it

Utrecht University - Tjalling C. Koopmans Research Institute ( email )

Adam Smith Building
Kriekenpitplein 21-22
Utrecht, 3584 EC
Netherlands

Michele Meoli

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
+390352052026 (Phone)
+390352052077 (Fax)

Silvio Vismara

University of Bergamo ( email )

Via dei Caniana
2
Bergamo, 24127
Italy
24127 (Fax)

HOME PAGE: http://https://scholar.google.it/citations?user=Sa8sBkoAAAAJ&hl=en

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