TY - JOUR
T1 - Lifting the Veil on reverse leveraged buyouts
T2 - What happens during the private period?
AU - Datta, Sudip
AU - Gruskin, Mark
AU - Iskandar-Datta, Mai
PY - 2013/12
Y1 - 2013/12
N2 - We document the different types of restructuring activities undertaken during the private period after the reverse leveraged buyout (RLBO) of previously public firms. Preceding the LBO, firm leverage significantly exceeds that of their peers, while their profitability is better than the industry. However, despite their superior performance, these firms are undervalued before going private. While private firms undertake value-enhancement measures by increasing employee productivity, asset restructuring, decreasing cost of goods sold, and increasing ownership concentration. Enhanced valuation at the RLBO is a result of value capture, as well as efficiencies obtained from restructuring activities. We also identify factors determining the private period duration.
AB - We document the different types of restructuring activities undertaken during the private period after the reverse leveraged buyout (RLBO) of previously public firms. Preceding the LBO, firm leverage significantly exceeds that of their peers, while their profitability is better than the industry. However, despite their superior performance, these firms are undervalued before going private. While private firms undertake value-enhancement measures by increasing employee productivity, asset restructuring, decreasing cost of goods sold, and increasing ownership concentration. Enhanced valuation at the RLBO is a result of value capture, as well as efficiencies obtained from restructuring activities. We also identify factors determining the private period duration.
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U2 - 10.1111/fima.12023
DO - 10.1111/fima.12023
M3 - Article
AN - SCOPUS:84886948604
SN - 0046-3892
VL - 42
SP - 815
EP - 842
JO - Financial Management
JF - Financial Management
IS - 4
ER -