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Le rôle de la dette dans le LBO : une revue de la littérature

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  • Ouidad Yousfi

Abstract

After 1985, a large number of LBO project were not able to meet their debt. Among these cases, the Federated Department Stores LBO repurchased by Campeau and the Gateway LBO repurchased by Macy's. But, the conventional view of LBO transactions is that they are designed to improve the efficiency of the firm. The question raised in this paper is the following : What makes the buyout debt so advantageous ? To answer to the question, we provide a survey of the theoretical and empirical literature based on two opposite sides : On the first side, debt is value enhancing (the agency theory, the tax savings theory, the asymmetric information theory, and the free cash flows theory). On the other side, debt creates private value captured by shareholders : The shareholders' gains come from the exploitation of financial market misevaluation, from the usage of tax benefits, and from rent expropriation from worker, suppliers and other corporate stakeholders (the transfer theory).

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Bibliographic Info

Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2007-8.

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Length: 29 pages
Date of creation: 2007
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Handle: RePEc:drm:wpaper:2007-8

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Keywords: Leverage buy out; asymmetric information; debt; capital structure; free cash-flows;

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  1. Kaplan, Steven N., 1991. "The staying power of leveraged buyouts," Journal of Financial Economics, Elsevier, vol. 29(2), pages 287-313, October.
  2. Miller, Merton H, 1977. "Debt and Taxes," Journal of Finance, American Finance Association, vol. 32(2), pages 261-75, May.
  3. Lichtenberg, Frank R. & Siegel, Donald, 1990. "The effects of leveraged buyouts on productivity and related aspects of firm behavior," Journal of Financial Economics, Elsevier, vol. 27(1), pages 165-194, September.
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  8. Andrei Shleifer & Lawrence H. Summers, 1987. "Breach of Trust in Hostile Takeovers," NBER Working Papers 2342, National Bureau of Economic Research, Inc.
  9. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 375-90, June.
  10. Muscarella, Chris J & Vetsuypens, Michael R, 1990. " Efficiency and Organizational Structure: A Study of Reverse LBOs," Journal of Finance, American Finance Association, vol. 45(5), pages 1389-1413, December.
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  14. Ippolito, Richard A & James, William H, 1992. " LBOs, Reversions and Implicit Contracts," Journal of Finance, American Finance Association, vol. 47(1), pages 139-67, March.
  15. Servaes, Henri, 1994. "Do Takeover Targets Overinvest?," Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 253-77.
  16. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 393-414, July.
  17. Casamatta, Catherine, 2002. "Financing and Advising: Optimal Financial Contracts with Venture Capitalists," CEPR Discussion Papers 3475, C.E.P.R. Discussion Papers.
  18. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  19. DeAngelo, Harry & DeAngelo, Linda & Rice, Edward M, 1984. "Going Private: Minority Freezeouts and Stockholder Wealth," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 367-401, October.
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