Asset sales and the role of buyers: strategic buyers versus private equity

Hege, Ulrich and Lovo, Stefano and Slovin, Myron B. and Sushka, Marie E. (2009): Asset sales and the role of buyers: strategic buyers versus private equity.

Abstract

We model bidding behavior and the interaction of private equity and strategic buyers in corporate asset sales. Private equity bidding and in turn seller gains, and type and time of exit, are determined by private equity's ability to enhance the asset's value. Our empirical results show excess returns to sellers are greater for sales to private equity than strategic buyers. Seller gains in private equity deals are related to subsequent increases in asset values and type and time of exit. Value increases during private equity ownership significantly exceed those of benchmark firms.

• Item Type: MPRA Paper
• Language: English
• Keywords: Private equity, asset sales, restructuring, corporate auctions, secondary buyouts
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill

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