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The Impacts of LBOs on the Performance of Acquired Firms: The French Case

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  • Phillippe Desbrières
  • Alain Schatt

Abstract

This paper investigates the financial characteristics and changes in performance of French companies involved in a leveraged buy–out. The empirical study covers a sample of 161 MBOs in France from 1988 to 1994. The acquired firms outperform their counterparts in the same sector of activity before and after the buy–out. However, unlike findings concerning LBOs in the USA and the UK, the performance of French firms falls after the operation is completed. This downturn in performance seems to be less detrimental to former subsidiaries of groups than to former family businesses.

Suggested Citation

  • Phillippe Desbrières & Alain Schatt, 2002. "The Impacts of LBOs on the Performance of Acquired Firms: The French Case," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(5‐6), pages 695-729.
    • Handle: RePEc:bla:jbfnac:v:29:y:2002:i:5-6:p:695-729
    DOI: 10.1111/1468-5957.00447
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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