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The role of investor capabilities in public-to-private transactions

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  • H. T.J. SMIT
  • W. DE MAESENEIRE

Abstract

In a public-to-private (PTP) acquisition, the gained control and the capabilities of the private equity investor affect strategic management of the firm and its value. We examine the role of idiosyncratic investor capabilities in the value appropriation from PTPs and provide implications for the changing market for private equity. Next to the traditional sources of value, we incorporate and value entrepreneurial aspects, investor specialisation, path-dependency and levering the private investor’s core competencies. Due to competition and replicability an increasing part of value creation in PTPs is reflected in the acquisition premium. As a result, we expect more specialization in private equity to lever idiosyncratic capabilities, as can be observed in buy-and-build strategies.

Suggested Citation

  • H. T.J. Smit & W. De Maeseneire, 2005. "The role of investor capabilities in public-to-private transactions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/290, Ghent University, Faculty of Economics and Business Administration.
  • Handle: RePEc:rug:rugwps:05/290
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    References listed on IDEAS

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    4. Steven Kaplan & Antoinette Schoar, 2003. "Private Equity Performance: Returns, Persistence and Capital," NBER Working Papers 9807, National Bureau of Economic Research, Inc.
    5. H. Ooghe & V. Collewaert, 2004. "Het financieel profiel van Waalse groeiondernemingen op basis van de positioneringsroos," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/239, Ghent University, Faculty of Economics and Business Administration.
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