Dissertation--University St. Gallen, 2005. / Includes bibliographical references (p. [439]-457).

Thesis (doctoral) - Univesität, Sankt Gallen, 2005.

Dissertation--Univesität St. Gallen, 2005. / Includes bibliographical references (p. [439]-457.

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Paper concentrates on issues regarding Leveraged Buyout transactions. It briefly depicts most common structure of transactions and means of financing. Substantial space is dedicated to two main participants on leveraged buyouts; investment banks and private equity funds. Instead on focusing on thoroughly described financing of the acquisition via secured bank loans we dedicate space in the thesis to mezzanine finance and high yield bonds. Second part of the thesis analysis latest development in the two main and most active regions regarding mergers and acquisition activity (Europe and USA) and compares Central Europe with it. Although capital markets developed substantially over past decades they are still lagging significantly former.

Examensarbete i foretagsekonomi, Ekonomihögskolan vid Linnéuniversitetet, 2FE93E, VT 2017 Författare Johan Asplund, Henrik Norrman och Therese Rodger Handledare Andreas Stephan Titel Hur investmentbolag paverkar kapitalstrukturen i sina innehav - En fallstudie av Ratos Bakgrund Bolags kapitalstruktur, fördelningen mellan bolagets tillgångar och skulder, visar hur bolaget finansierar sin verksamhet. Private Equity bolag lånar kapital för att kunna investera i nya uppköp av onoterade bolag och har ofta en begränsad planerad ägarhorisont. Kapitalstruktur har undersökts under lång tid men inte hur en majoritetsägare påverkar kapitalstrukturen i sina andelsbolag. Tidigare studier fokuserar pa exempelvis kapitalstrukturer i industriföretag eller kapitalstrukturer i småforetag. Syfte Syftet med studien ar att analysera om ett investmentbolag påverkar kapitalstrukturen i sina innehavsbolag nar de genom uppköp har gått in som en majoritetsägare i dessa bolag och vilka effekter förändringen kan leda till. Metod Studien utgår från en kvantitativ ansats där finansiella nyckeltal av Ratos innehavsbolag undersöks före och efter det att Ratos gått in som majoritetsagare i bolaget. Dessa nyckeltal jämförs sedan med branschspecifika nyckeltal genererade från SCB. Resultat I studien återfinns inget entydigt bevis på att vårt valda Private Equity bolag, Ratos, ändrar kapitalstrukturen väsentligt på något sätt efter att ha gått in som majoritetsägare i ett bolag. / A company’s choice of capital structure is a well documented field in financial research but no unambiguous results are available regarding how the company is best financed or what actually defines the optimal capital structure for a company. The purpose of this study is to examine the possible changes on a company’s capital structure once a Private Equity company has become the majority owner. In this study a deductive approach has been used and a quantitative survey has been applied. Financial ratios from yearly reports of companies before and after the Swedish Private Equity company Ratos became the majority owner have been analysed and compared with the hypothesis that a Private Equity majority owner would significantly change the capital structure of the acquired company. The selection criteria for the companies was that Ratos should own more than 50 % of the company in order to actually have an impact on how the company is financed, in addition the selected companies needed to have data available in the form of yearly reports both prior to Ratos becoming the majority owner and at least two years afterwards in order to study the eventual changes of the take over. Financial ratios such as debt to equity ratio, leverage and return on equity were then calculated and results analysed. Theories of capital structure such as the Trade off theory, Pecking order theory, Miller and Modigliani and the Agency theory have also been applied to analyse the outcome. The method of comparison used was the differencein-difference method with data from Statistics Sweden (SCB) from similar relevant companies. The results of this study do not indicate that the capital structure of the company changes significantly within the first two years after acquisition by the majority owner Ratos. Suggestions for further studies would be to analyse a wider group of Private Equity companies as majority owners and observe eventual changes in capital structure in takeovers.

In this thesis we examine the shared characteristics of companies that undergo leveraged buyouts from public markets in Europe between 2005-2015 and whether credit markets have an impact on these characteristics. This is done by conducting logistical regressions on public data and through interviews with industry professionals. Our results indicate that companies that undergo leveraged buyouts from public markets have low financial liquidity and are undervalued, while high free cash flow, potential tax savings and pre-acquisition debt levels were found to be insignificant. Credit markets are found to have a profound effect on the characteristics that are sought after by private equity firms, as the statistical analysis give different significant variables depending on the state of the credit market, which is in line with the interview results. In good credit markets, potential financial distress costs are higher for bought out companies than the control group, while in bad credit markets a strong growth potential and undervaluation are the significant characteristics. The interviews also showed that investment professionals focus more on qualitative aspects, e.g. competitive advantage, when evaluating an investment opportunity, while the financial characteristics play a subdued role / I denna uppsats undersöker vi de delade karaktäristika hos företag som genomgår leveraged buyouts från de publika marknaderna i Europa mellan år 2005 och 2015, och huruvida dessa gemensamma drag skiljer sig åt beroende på tillståndet på kreditmarknaden. För att göra detta genomförs logistiska regressioner på publik data och intervjuer med industrierfarna. Våra resultat indikerar att företag som genomgår leveraged buyouts från publika marknader har låg finansiell likviditet och är undervärderade, medan höga kassaflöden, potentiella skattebesparingar och skuldnivåer inte särskiljer dem. Kreditmarknader visar sig ha en stor effekt på de karaktäristika som sökes av riskkapitalbolag, då den statistiska analysen ger olika signifikanta variabler beroende på tillståndet på kreditmarknader. Detta styrks också av intervjusvar. I goda kreditmarknader är potentiella kostnader av finansiella problem (financial distress) högre för de företag som köps upp än för kontrollgruppen. I dåliga kreditmarknader är en god tillväxtpotential och undervärdering särskiljande för de bolag som blir uppköpta. Intervjuerna visade också att investerare fokuserar mer på kvalitativa aspekter, såsom konkurrensfördelar, när de utvärderar en investeringsmöjlighet, medan finansiella karaktäristika är faktorer de utvärderar i andra hand.

Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: This study project explains the theory of Leveraged-Buy-Outs and describes the different financial tools than can be used. Special emphasis is laid in the capital structure of a Leveraged-Buy-Out and its impact on the return for the investor. The theory is then put in perspective by giving insight in the case study of the Cognis Group, a speciality chemicals company, based in Germany. It was sold to Private Equity companies in 2001 and since then underwent various refinancing including the issuing of High Yield Bonds and the issuing of Payment-In-KindNotes. / AFRIKAANSE OPSOMMING: Die teorie rakende gehefboomde bestuuroornames en die gebruik van verskillende finansiele instrumente by bestuursoornames word in hierdie werkstuk beskryf. Klem word gelê op die impak wat 'n verandering in die kapitaalstruktuur van die maatskappy op die belegger kan hê as gevolg van 'n gehefboomde bestuursoorname. Die teorie word toegelig deur te vervvys na die Cognis Groep maatskappye in Duitsland as gevallestudie. Die maatskappy het 'n bestuursoorname ondergaan in 2001 asook verskeie veranderinge in die kapitaalstruktuur daarna waar onder andere gebruik gemaak was van lae gehalte effekte.

Thesis advisor: Thomas J. Chemmanur / My Ph.D. dissertation consists of three essays. The first essay examines the effect of hedge funds on target shareholder gains in leveraged buyouts (LBOs). I find that the initial buyout premium is increasing in the preannouncement presence of hedge funds, measured as the fraction of target equity held by hedge funds before the announcement. Using a geographic instrument for the presence of hedge fund, I find that this relationship persists even after controlling for endogeneity. I further show that this effect holds only for active hedge funds and long-term hedge funds, and is stronger for management-led LBOs than for third-party LBOs. Overall, the findings suggest that hedge funds protect target shareholder interests in LBOs by using their hold-out power. The second essay examines the relation between expected market volatility and the demand for liquidity in open-end mutual funds. The empirical results are consistent with precautionary motives for holding liquid assets, i.e., fund managers tilt their holdings more heavily toward liquid stocks when the market is expected to be more volatile. This dynamic preference for liquid stocks is more pronounced among small fund families, low-load funds, funds whose past performance has been unfavorable, funds with high return volatility, growth-oriented funds, and high-turnover funds. I further show that this type of behavior is valuable for fund investors during high volatility periods because it has led to significantly (both statistically and economically) higher subsequent abnormal returns. The third essay, co-authored with Thomas Chemmanur and Gang Hu, directly tests Brennan and Hughes' (1991) information production theory of stock splits by making use of a large sample of transaction-level institutional trading data. We compare brokerage commissions paid by institutional investors before and after a split, and relate the informativeness of institutional trading to brokerage commissions paid. We also compute realized institutional trading profitability net of brokerage commissions and other trading costs. Our results can be summarized as follows. First, both commissions paid and trading volume by institutional investors increase after a stock split. Second, institutional trading immediately after a split has predictive power for the firm's subsequent long-term stock return performance; this predictive power is concentrated in stocks which generate higher commission revenues for brokerage firms and is greater for institutions that pay higher brokerage commissions. Third, institutions make positive abnormal profits during the post-split period even after taking brokerage commissions and other trading costs into account; institutions paying higher commissions significantly outperform those paying lower commissions. Fourth, the information asymmetry faced by firms decreases after a split; the greater the increase in brokerage commissions after a split, the greater the reduction in information asymmetry. Overall, our results are broadly consistent with the implications of the information production theory. / Thesis (PhD) — Boston College, 2009. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.

This paper utilizes a hazard model to predict the probability of leveraged buyout transactions for public firms. Rather than testing specific hypotheses, this paper incorporates all plausible predictors identified in existing literature to better delineate the effects of different characteristics. Largely confirming past results, I find that LBO transactions are more likely to occur for companies with more stable cash flows, less market visibility, lower market valuation, lower ownership concentration and lower costs of financial distress. By including LBO transactions from 1980 to September 2018, I find preliminary evidence that since the financial crisis of 2008 – 2009, private equity firms have modified their selection criteria when sourcing LBO deal targets.