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L’impact des LBO sur la défaillance des entreprisesLe cas des cibles françaises (2000-2010)

Author

Listed:
  • Nicolas Bedu
  • Jean-Etienne Palard

    (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux)

Abstract

This article investigates whether leveraged buy-out (LBO) transactions increase or decrease the risk of financial distress of French companies. According to agency theory, the increase of the bankruptcy risk, induced by rising debt levels, should be offset by the introduction of new governance mechanisms that improve business performance and ultimately reduce the risk of failure. The empirical study is based on a propensity score matching model which focuses on a sample of 626 LBOs with 55 operations that have experienced financial distress between 2000 and 2010 in France. The results show that the failure rate is significantly higher in the sample than the matched firms in the model. Moreover, the rate of bankruptcy is positively correlated with the post-acquisition debt level and the economic return before and after the buyout.

Suggested Citation

  • Nicolas Bedu & Jean-Etienne Palard, 2014. "L’impact des LBO sur la défaillance des entreprisesLe cas des cibles françaises (2000-2010)," Post-Print hal-03262021, HAL.
    • Handle: RePEc:hal:journl:hal-03262021
    DOI: 10.4000/fcs.1465
    as

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