On Secondary Buyouts

Degeorge, Francois, Martin, Jens and Phalippou, Ludovic (2015) On Secondary Buyouts. Journal of Financial Economics.

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Abstract

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: Article
Keywords: Private equity, buyouts, performance, secondary buyouts, finance
Subject(s): Finance
Date Deposited: 20 Mar 2015 14:35
Last Modified: 20 Feb 2017 03:38
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5271

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