We gratefully acknowledge the helpful comments from an anonymous referee, Sophie Manigart, Per Strömberg, and participants at the Financial Management Association (FMA) European Meeting in Hamburg (June 2010).
What drives leverage in leveraged buyouts? An analysis of European leveraged buyouts’ capital structure
Article first published online: 10 JUL 2011
© 2011 The Authors. Accounting and Finance © 2011 AFAANZ
Accounting & Finance
Volume 52, Issue Supplement s1, pages 155–182, October 2012
How to Cite
De Maeseneire, W. and Brinkhuis, S. (2012), What drives leverage in leveraged buyouts? An analysis of European leveraged buyouts’ capital structure. Accounting & Finance, 52: 155–182. doi: 10.1111/j.1467-629X.2011.00431.x
- Issue published online: 5 OCT 2012
- Article first published online: 10 JUL 2011
- Received 9 December 2010; accepted 11 May 2011 by Robert Faff (Editor).
- Capital structure;
- Leveraged buyout;
- Financial flexibility
- G32 – Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure;
- G24 – Investment Banking; Venture Capital; Brokerage
This paper examines leverage in European private equity-led leveraged buyouts (LBOs). We use a unique, self-constructed sample of 126 European private equity (PE)-sponsored buyouts completed between June 2000 and June 2007. We find that determinants derived from classical capital structure theories do not explain leverage in LBOs, while they do drive leverage in a control group of comparable public firms. Rather, we document that leverage levels in LBOs are related to the prevailing conditions in the debt market. In addition, our results indicate that reputed private equity sponsors use more debt and that secondary buyouts have higher leverage levels.