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Asset sales and the role of buyers: strategic buyers versus private equity

  • Hege, Ulrich
  • Lovo, Stefano
  • Slovin, Myron B.
  • Sushka, Marie E.

We model bidding behavior and the interaction of private equity and strategic buyers in corporate asset sales. Private equity bidding and in turn seller gains, and type and time of exit, are determined by private equity's ability to enhance the asset's value. Our empirical results show excess returns to sellers are greater for sales to private equity than strategic buyers. Seller gains in private equity deals are related to subsequent increases in asset values and type and time of exit. Value increases during private equity ownership significantly exceed those of benchmark firms.

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File URL: http://mpra.ub.uni-muenchen.de/39549/1/MPRA_paper_39549.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39549.

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Date of creation: Sep 2009
Date of revision: Feb 2012
Handle: RePEc:pra:mprapa:39549
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  1. Raghuram Rajan & Henri Servaes & Luigi Zingales, 1998. "The Cost of Diversity: The Diversification Discount and Inefficient Investment," NBER Working Papers 6368, National Bureau of Economic Research, Inc.
  2. Kaplan, Steven N., 1989. "Campeau's acquisition of federated : Value destroyed or value added," Journal of Financial Economics, Elsevier, vol. 25(2), pages 191-212, December.
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  4. Hege, Ulrich & Lovo, Stefano & Slovin, Myron & Sushka, Marie, 2006. "Equity and cash in intercorporate asset sales : theory and evidence," Les Cahiers de Recherche 859, HEC Paris.
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  8. Frank R Lichtenberg & Donald Siegel, 1989. "The Effects Of Leveraged Buyouts On Productivity And Related Aspects Of Firm Behavior," Working Papers 89-5, Center for Economic Studies, U.S. Census Bureau.
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  13. Malcolm Baker & Richard S. Ruback & Jeffrey Wurgler, 2004. "Behavioral Corporate Finance: A Survey," NBER Working Papers 10863, National Bureau of Economic Research, Inc.
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  15. Nicholas Barberis & Richard Thaler, 2002. "A Survey of Behavioral Finance," NBER Working Papers 9222, National Bureau of Economic Research, Inc.
  16. Muscarella, Chris J & Vetsuypens, Michael R, 1990. " Efficiency and Organizational Structure: A Study of Reverse LBOs," Journal of Finance, American Finance Association, vol. 45(5), pages 1389-1413, December.
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  18. Shourun Guo & Edie S. Hotchkiss & Weihong Song, 2008. "Do Buyouts (Still) Create Value?," NBER Working Papers 14187, National Bureau of Economic Research, Inc.
  19. Jain, Prem C, 1985. " The Effect of Voluntary Sell-off Announcements on Shareholder Wealth," Journal of Finance, American Finance Association, vol. 40(1), pages 209-24, March.
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