Longevity and the life-cycle of management buy-outs
Article first published online: 8 NOV 2006
Copyright © 1994 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 15, Issue 3, pages 215–227, March 1994
How to Cite
Wright, M., Robbie, K., Thompson, S. and Starkey, K. (1994), Longevity and the life-cycle of management buy-outs. Strat. Mgmt. J., 15: 215–227. doi: 10.1002/smj.4250150303
- Issue published online: 8 NOV 2006
- Article first published online: 8 NOV 2006
- Manuscript Revised: 27 JUL 1993
- Manuscript Received: 7 DEC 1992
- Management buy-outs;
- corporate restructuring;
The longevity debate about buy-outs has hitherto been restricted. By focusing on large highly leveraged transactions, existing research has taken only a partial view of how long buy-outs last and the factors influencing longevity. This paper develops and tests hypotheses concerning the influences on buy-out longevity across the whole spectrum of management buy-out applications. Both quantitative and case study evidence from the U. K. is presented. A heterogeneity view of buy-outs is supported. Tests using quantitative data show that earlier exit is associated with larger buy-outs, and buy-outs arising on privatization from the public sector and from non-U. K. parents. Case study evidence principally supports hypotheses that earlier exit is associated with financing institutions being in a relatively stronger position than management and with more rapidly changing market conditions for the firm.