Staying Power of UK Buy-Outs


  • Ranko Jelic

    Corresponding author
    1. The author is from the Business School at the University of Birmingham. He would like to thank an anonymous referee, Peter Pope (Editor), and participants at the 2009 Centre for South European Finance Seminar in Belgrade and the 2008 Annual Meeting of the European Financial Management Association (EFMA) in Athens, for helpful comments and suggestions. The author gratefully acknowledges a personal research grant (#2004–01) from the UK Institute for Quantitative Investment Research (INQUIRE) received for the project: UK Private Equity Market: Longevity, Exit Strategies and Performance of Management Buy-outs. He also thanks Thi Hoang Anh and Lei Zheng for valuable research assistance.
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Ranko Jelic, Business School – University of Birmingham, Birmingham B15 2TT, UK.


Abstract:  This paper examines 1,089 private equity (PE) backed and non-PE backed (pure) UK buy-outs, determinants of their survival, and their exit behaviour during the period of 1966–2004. Our results suggest that 56% of the pure sample buy-outs remained in a buy-out organisational form for at least seven years after the original buy-out transaction, thus lending support to views that buy-outs present long rather than short term form. PE backed buy-outs exhibit higher exit rates, fewer early (within 12 months) exits and fewer liquidations than their pure counterparts. Buy-outs sponsored by PE syndicates, those harvested during periods with strong market conditions and greater supply of PE funding, tend to have shorter longevity. The most notable difference between the survival experiences of PE backed and pure buy-outs is documented in IPO exits, where a significant number of pure buy-outs exit early to the Alternative Investment Market (AIM).