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Fare Thee Well? An Analysis of Buyout Funds’ Exit Strategies
Author(s) -
Fürth Sven,
Rauch Christian
Publication year - 2015
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12070
Subject(s) - initial public offering , divestment , portfolio , business , leveraged buyout , finance , exit strategy , private equity , marketing
This paper analyzes exit strategies of buyout funds in portfolio companies following initial public offerings (IPOs). We use a data set of 222 buyout‐backed IPOs in the United States from 1999 to 2008, including hand‐collected data about each exit process, to draw a detailed roadmap of buyout investors’ divestment processes. Using this data, we document the timing and aggressiveness of the exit strategies, and analyze to which degree a multitude of possible determinants influence the choice of a given exit strategy. Our results indicate that buyout funds remain invested in their portfolio companies for a substantial period of time after the IPO, and that the choice of a given exit strategy depends not only upon the characteristics of each respective portfolio company, but also on the financial success of the deal from the perspective of the buyout investor.