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Retail Customer Reactions to Private Equity Acquisitions

Author

Listed:
  • Vesa Pursiainen

    (University of St. Gallen; Swiss Finance Institute)

  • Tereza Tykvova

    (University of St. Gallen - Swiss Institute of Banking and Finance; Swiss Finance Institute)

Abstract

Acquisition announcements by private equity funds are associated with significant reductions in customer visits to target firm outlets, measured using aggregated mobile phone data. These reductions occur in primary but not in secondary buyouts. Customer reviews do not become more negative. Following deal completion, the customer losses are reversed. Thus, the initial decrease is unlikely to be the consequence of operational changes. The decrease in visits is smaller in areas with higher economic connectedness, income, stock market participation, and self-employment rates, and larger in altruistic, Republican-voting and individualistic regions. The decrease is also larger for outlets facing more competition.

Suggested Citation

  • Vesa Pursiainen & Tereza Tykvova, 2023. "Retail Customer Reactions to Private Equity Acquisitions," Swiss Finance Institute Research Paper Series 23-05, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2305
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    More about this item

    Keywords

    private equity; buyout; customer reaction; reputation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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