Premium
The Effects of the Specialization of Private Equity Firms on their Exit Strategy
Author(s) -
Rigamonti Damiana,
Cefis Elena,
Meoli Michele,
Vismara Silvio
Publication year - 2016
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12221
Subject(s) - initial public offering , private equity , equity (law) , business , leveraged buyout , sample (material) , large sample , monetary economics , finance , economics , chemistry , statistics , mathematics , chromatography , political science , law
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 of exiting 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.