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Private equity bids in Australia: an exploratory study

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  • Larelle Chapple
  • Peter M. Clarkson
  • Jesse J. King

Abstract

In this study, we provide an insight into how private equity players choose their targets and the bid arrangements they prefer. We test our expectations of the unique features of private equity targets using a sample of 23 listed private equity target firms during 2001-2007. We find, relative to a benchmark sample of 81 corporate targets matched by year and industry, the private equity target firms to be larger, more profitable, use their assets more efficiently, more highly levered and have greater cash flow. Multivariate testing indicates that private equity targets have relatively greater financial slack, greater financial stability, greater free cash flow and lower measurable growth prospects. All conclusions are found to be robust to a control sample of 502 takeover bids during 2001-2007. Copyright (c) The Authors. Journal compilation (c) 2009 AFAANZ.

Suggested Citation

  • Larelle Chapple & Peter M. Clarkson & Jesse J. King, 2010. "Private equity bids in Australia: an exploratory study," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(1), pages 79-102.
  • Handle: RePEc:bla:acctfi:v:50:y:2010:i:1:p:79-102
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-629X.2009.00323.x
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    Cited by:

    1. Sarah Osborne & Dean Katselas & Larelle Chapple, 2012. "The preferences of private equity investors in selecting target acquisitions: An international investigation," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 361-389, December.

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