Les Cahiers de Recherche - HEC Paris
Money chasing deals and chasing money - the impact of supply and demand on buyout performance
() and Daniel Zipser
Abstract: This paper analyzes the impact of differences in supply of
and demand for private equity financing on the performance of buyouts.
Using a unique and proprietary sample of 684 buyout investments in North
America and Europe, we show that buyout performance decreases when large
volumes of private equity commitments are looking for suit-able acquisition
targets and (b) increases when macroeconomic conditions are such that
demand for private equity financing is high. These findings remain
unchanged if we control for the idiosyncrasies of individual investment
periods, transaction size, holding period and industry sector of individual
investment and the vintage year, the size or the age of the investing
private equity fund. Our results support the view that the market for
buyout target companies is not necessarily efficient, but that instead
acquisition prices (and thereby transaction performance) depend on the
competition by a limited number of private equity fund managers for a
limited number of attractive investment opportuni-ties.
Keywords: Private Equity funds; buyouts; performance; investment behavior; (follow links to similar papers)
JEL-Codes: G11; G14; G23; G24; (follow links to similar papers)
50 pages, June 1, 2006
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Sandra Dupouy ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design Joakim Ekebom