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Agency, strategic entrepreneurship, and the performance of private equity-backed buyouts

Author

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  • Mike Wright

    (emlyon business school)

  • Miguel Meuleman
  • Louise Scholes
  • Kevin Amess

Abstract

Agency theory has focused on buyouts as a governance and control device to increase profitability, organizational efficiency, and limited attention to growth. A strategic entrepreneurship view of buyouts incorporates upside incentives for value creation associated with growth as well as efficiency gains. In this paper, we develop the complementarity between agency theory and strategic entrepreneurship perspectives to examine the performance implications for different types of buyouts. Further, we study how the involvement of private equity (PE) firms is related to the performance of the post-buyout firm. These issues are examined for a sample of 238 PE-backed buyouts in the UK between 1993 and 2003. Implications for theory and practice are suggested.

Suggested Citation

  • Mike Wright & Miguel Meuleman & Louise Scholes & Kevin Amess, 2009. "Agency, strategic entrepreneurship, and the performance of private equity-backed buyouts," Post-Print hal-02312472, HAL.
  • Handle: RePEc:hal:journl:hal-02312472
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02312472
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    Cited by:

    1. Anne-Laure Le Nadant & Frédéric Perdreau, 2011. "LBOs and innovation: the French case," Post-Print halshs-00669910, HAL.
    2. Hans Bruining & Ernst Verwaal & Mike Wright, 2013. "Private equity and entrepreneurial management in management buy-outs," Small Business Economics, Springer, vol. 40(3), pages 591-605, April.
    3. Anne-Laure Le Nadant & Frédéric Perdreau, 2011. "Do Private Equity Firms Foster Innovation? Evidence from French LBOs," Post-Print halshs-00773693, HAL.
    4. Colin Mason & Ross Brown, 2013. "Creating good public policy to support high-growth firms," Small Business Economics, Springer, vol. 40(2), pages 211-225, February.
    5. Richard A. Hunt & Bret Fund, 2012. "Reassessing the Practical and Theoretical Influence of Entrepreneurship Through Acquisition," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 16(1), pages 29-56, Spring.
    6. Charlie Weir & Peter Jones & Mike Wright, 2015. "Public to private transactions, private equity and financial health in the UK: an empirical analysis of the impact of going private," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 91-112, February.
    7. Erik Lehmann & Thorsten Braun & Sebastian Krispin, 2012. "Entrepreneurial human capital, complementary assets, and takeover probability," The Journal of Technology Transfer, Springer, vol. 37(5), pages 589-608, October.
    8. Annalisa Croce & Diego D’Adda & Elisa Ughetto, 2015. "Venture capital financing and the financial distress risk of portfolio firms: How independent and bank-affiliated investors differ," Small Business Economics, Springer, vol. 44(1), pages 189-206, January.
    9. Amess, Kevin & Stiebale, Joel & Wright, Mike, 2015. "The impact of private equity on firms' innovation activity," DICE Discussion Papers 184, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Paolo Toma & Stefano Montanari, 2017. "Corporate governance effectiveness along the entrepreneurial process of a family firm: the role of private equity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(4), pages 1023-1052, December.
    11. Kevin Amess & Mike Wright, 2012. "Leveraged buyouts, private equity and jobs," Small Business Economics, Springer, vol. 38(4), pages 419-430, May.
    12. Fabio Bertoni & María Ferrer & José Martí, 2013. "The different roles played by venture capital and private equity investors on the investment activity of their portfolio firms," Small Business Economics, Springer, vol. 40(3), pages 607-633, April.
    13. Galina Shirokova & Liudmila Ivvonen & Elena Gafforova, 2019. "Strategic Entrepreneurship in Russia during Economic Crisis," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 13(3), pages 62-76.
    14. Benjamin Hammer & Heiko Hinrichs & Bernhard Schwetzler, 2018. "Does culture affect the performance of private equity buyouts?," Journal of Business Economics, Springer, vol. 88(3), pages 393-469, May.
    15. Deryck J van Rensburg, 2013. "Is Strategic Entrepreneurship a Pleonasm?," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 4(1), pages 15-27, February.
    16. Shirokova, G. & Ivvonen, L., 2016. "Performance of Russian SMEs during the economic crisis: The role of strategic entrepreneurship," Working Papers 6454, Graduate School of Management, St. Petersburg State University.
    17. Laure-Anne Parpaleix & Kevin Levillain & Blanche Segrestin, 2018. "Financing innovation: two models of private equity investment," Post-Print hal-01768986, HAL.

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