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Leveraged Buyouts in the U.K. and Continental Europe: Retrospect and Prospect

  • Mike Wright
  • Luc Renneboog
  • Tomas Simons
  • Louise Scholes

The markets for management buyouts in the U.K. and continental Europe have experienced dramatic growth in the past ten years. In the U.K., buyouts accounted for half of the total M&A activity (measured by value) in 2005. And as in the U.S. during the'80s, the greatest number of U.K. buyouts in recent years have been management- and investor-led acquisitions of divisions of large corporations. In continental Europe, by contrast, the largest fraction of deals has involved the purchase of family-owned private businesses. But in recent years, increased pressure for shareholder value in countries like France, Netherlands, and even Germany has led to a growing number of buyouts of divisions of listed companies. Like the U.K., continental Europe has also seen a small but growing number of purchases of entire public companies (known as private-to-public transactions, or PTPs), including the largest ever buyout in Europe, the €13 billion purchase this year of the Danish corporation TDC. 2006 Morgan Stanley.

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Article provided by Morgan Stanley in its journal Journal of Applied Corporate Finance.

Volume (Year): 18 (2006)
Issue (Month): 3 ()
Pages: 38-55

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Handle: RePEc:bla:jacrfn:v:18:y:2006:i:3:p:38-55
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  1. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July.
  2. Lehn, Kenneth & Poulsen, Annette, 1989. " Free Cash Flow and Stockholder Gains in Going Private Transactions," Journal of Finance, American Finance Association, vol. 44(3), pages 771-87, July.
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  4. Renneboog, L.D.R. & Simons, T. & Wright, M., 2005. "Leveraged Public to Private Transactions in the UK," Discussion Paper 2005-015, Tilburg University, Tilburg Law and Economic Center.
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  8. Mike Wright & Andy Lockett, 2003. "The Structure and Management of Alliances: Syndication in the Venture Capital Industry," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2073-2102, December.
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  10. Ranko Jelic & Brahim Saadouni & Mike Wright, 2005. "Performance of Private to Public MBOs: The Role of Venture Capital," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3-4), pages 643-682.
  11. 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.
  12. Van de Gucht, Linda M. & Moore, William T., 1998. "Predicting the duration and reversal probability of leveraged buyouts," Journal of Empirical Finance, Elsevier, vol. 5(4), pages 299-315, October.
  13. Kaplan, Steven, 1989. "The effects of management buyouts on operating performance and value," Journal of Financial Economics, Elsevier, vol. 24(2), pages 217-254.
  14. David Citron & Mike Wright & Rod Ball & Fred Rippington, 2003. "Secured Creditor Recovery Rates from Management Buy-outs in Distress," European Financial Management, European Financial Management Association, vol. 9(2), pages 141-161.
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