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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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    File URL: http://wps-feb.ugent.be/Papers/wp_05_290.pdf
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    References listed on IDEAS

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    1. Gompers, Paul & Lerner, Josh, 2000. "Money chasing deals? The impact of fund inflows on private equity valuation," Journal of Financial Economics, Elsevier, vol. 55(2), pages 281-325, February.
    2. D. Vandaele & P. Gemmel, 2004. "Development of a measurement scale for business-to-business service quality: assessment in the facility services sector," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/259, Ghent University, Faculty of Economics and Business Administration.
    3. T. Faseur & M. Geuens, 2004. "Different Positive Feelings Leading to Different Ad Evaluations: The Case of Cosiness, Excitement and Romance," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/280, Ghent University, Faculty of Economics and Business Administration.
    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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