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J Manag Gov (2015) 19:91112
DOI 10.1007/s10997-013-9270-9
Charlie Weir Peter Jones Mike Wright
Published online: 21 April 2013 Springer Science+Business Media New York 2013
Abstract Using a hand collected data set of 138 buy-outs, this paper presents the rst analysis of the impact effects of public to private transactions (PTPs) in the UK during a period (19982004) in which PTPs became a signicant part of the market for corporate control. We nd that for all PTPs there is a signicant improvement in nancial health in the post deal years relative to the year before going private. We also nd that there is a signicant improvement in the nancial health of PTPs relative to rms remaining public. The analysis of the individual elements of the z-score shows that there are signicant improvements in working capital and liquidity post deal. Protability, however, shows signicant declines in a number of the post deal years. We also nd that both private equity (PE) and non PE-backed deals produce improvements in nancial health but that there is no difference between the two types of deal. These outcomes provide some support for the Jensen (Am Econ Rev 76:323329, 1986, Harv Bus Rev 67:6174, 1989) arguments that going private creates an organizational structure that reduces agency costs. However, they do suggest that the claims that the nancial and governance mechanisms
C. Weir (&) P. Jones
Aberdeen Business School, Robert Gordon University, Garthdee Road, Aberdeen AB10 7QE, Scotland, UKe-mail: [email protected]
P. Jonese-mail: [email protected]
M. Wright
Centre for Management Buyout Research, Imperial College Business School, 46 Exhibition Road, London SW7 2AZ, UKe-mail: [email protected]
M. Wright
Department of Business and Economics, University of Ghent, Tweekerkstraat, B-9000 Ghent, Belgium
Public to private transactions, private equityand nancial health in the UK: an empirical analysis of the impact of going private
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imposed by PE providers will produce better outcomes are strictly limited in the second wave of PTPs.
Keywords Public to private transactions Financial health Private equity
1 Introduction
Public to private transactions are a distinct and increasingly important type of acquisition (Weir and Wright 2006). A public to private (PTP) buyout involves buying the whole share capital of a publicly quoted company, usually by a newly incorporated unlisted company which has...