On Secondary Buyouts

Degeorge, Francois, Martin, Jens and Phalippou, Ludovic (2014) On Secondary Buyouts. University of Oxford.

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Buyout funds increasingly sell their portfolio companies to other buyout funds. These secondary
buyouts (SBOs) underperform primary buyouts. Yet, only SBOs made late in the investment period
underperform, consistent with funds using SBOs to sometimes “go for broke”. After a fund invests
in late SBOs, investors appear to shun the follow-on fund. Differences in risk do not explain these
results. SBOs bought by specialized funds and those bought from a fund-raising seller perform
better. Some companies seem better suited to private equity ownership as we find persistence in
both returns and exit channels between successive buyout transactions.

Item Type: Other Working Paper
Keywords: Private equity, buyouts, performance, secondary buyouts
Subject(s): Finance
Centre: Faculty of Finance
Date Deposited: 05 Nov 2014 16:40
Last Modified: 23 Oct 2015 14:08
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5217

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