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Longevity and the life‐cycle of management buy‐outs

Author

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  • Mike Wright
  • Ken Robbie
  • Steve Thompson
  • Ken Starkey

Abstract

The longevity debate about buy‐outs has hitherto been restricted. By focusing on large highly leveraged transactions, existing research has taken only a partial view of how long buy‐outs last and the factors influencing longevity. This paper develops and tests hypotheses concerning the influences on buy‐out longevity across the whole spectrum of management buy‐out applications. Both quantitative and case study evidence from the U. K. is presented. A heterogeneity view of buy‐outs is supported. Tests using quantitative data show that earlier exit is associated with larger buy‐outs, and buy‐outs arising on privatization from the public sector and from non‐U. K. parents. Case study evidence principally supports hypotheses that earlier exit is associated with financing institutions being in a relatively stronger position than management and with more rapidly changing market conditions for the firm.

Suggested Citation

  • Mike Wright & Ken Robbie & Steve Thompson & Ken Starkey, 1994. "Longevity and the life‐cycle of management buy‐outs," Strategic Management Journal, Wiley Blackwell, vol. 15(3), pages 215-227, March.
    • Handle: RePEc:bla:stratm:v:15:y:1994:i:3:p:215-227
    DOI: 10.1002/smj.4250150303
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    Cited by:

    1. Renneboog, L.D.R. & Simons, T., 2005. "Public-to-Private Transactions : LBOs, MBOs, MBIs and IBOs," Other publications TiSEM 3b76799c-591c-4d22-b126-a, Tilburg University, School of Economics and Management.
    2. Mike Wright & Paul Westhead & Jeff Sohl, 1998. "Editors’ Introduction: Habitual Entrepreneurs and Angel Investors," Entrepreneurship Theory and Practice, , vol. 22(4), pages 5-22, July.
    3. Deniz Ucbasaran & Paul Westhead & Mike Wright, 2001. "The Focus of Entrepreneurial Research: Contextual and Process Issues," Entrepreneurship Theory and Practice, , vol. 25(4), pages 57-80, July.
    4. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.
    5. Castellaneta, Francesco & Hannus, Simon & Wright, Mike, 2019. "A Framework for Examining the Heterogeneous Opportunities of Value Creation in Private Equity Buyouts," Annals of Corporate Governance, now publishers, vol. 4(2), pages 87-146, June.
    6. Renneboog, Luc & Vansteenkiste, Cara, 2017. "Leveraged Buyouts : A Survey of the Literature," Other publications TiSEM 573ebdd5-a720-4110-8ed1-e, Tilburg University, School of Economics and Management.
    7. Renneboog, Luc & Vansteenkiste, Cara, 2017. "Leveraged buyouts : Motives and sources of value," Other publications TiSEM 595dc51e-e516-42f5-a781-6, Tilburg University, School of Economics and Management.

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