IPO or SBO? The Increasing Importance of Operational Performance for Private Equity Exits Following the Global Financial Crisis of 2007-08

Emil Plagborg-Møller, Morten Holm

Research output: Contribution to journalJournal articleResearchpeer-review

74 Downloads (Pure)

Abstract

The authors report the findings of their recent study of the role of portfolio company operating performance in determining the choice of exit options by private equity firms between initial public offerings (IPOs) and secondary buyouts (SBOs), and how that role may have changed since the Global Financial Crisis of 2007–2008. Virtually all studies of PE exits in all countries have found that portfolio companies that exit through IPOs tend to be larger and have higher operating returns than companies that exit through SBOs or sales to other companies. After examining the exits of PE portfolio companies based in Denmark and Sweden during the period 2003–2013, the authors report that, although general market conditions continue to be a major factor, operating performance and size have become even more important requirements for IPO exits since the crisis. And thus PE firms that fail to make operating improvements in their portfolio companies are likely to find their exit options limited.
Original languageEnglish
JournalJournal of Applied Corporate Finance
Volume29
Issue number1
Pages (from-to)115-121
ISSN1078-1196
DOIs
Publication statusPublished - 2017

Cite this

@article{35d54c5c1be04832ad25dc9cc1f38870,
title = "IPO or SBO?: The Increasing Importance of Operational Performance for Private Equity Exits Following the Global Financial Crisis of 2007-08",
abstract = "The authors report the findings of their recent study of the role of portfolio company operating performance in determining the choice of exit options by private equity firms between initial public offerings (IPOs) and secondary buyouts (SBOs), and how that role may have changed since the Global Financial Crisis of 2007–2008. Virtually all studies of PE exits in all countries have found that portfolio companies that exit through IPOs tend to be larger and have higher operating returns than companies that exit through SBOs or sales to other companies. After examining the exits of PE portfolio companies based in Denmark and Sweden during the period 2003–2013, the authors report that, although general market conditions continue to be a major factor, operating performance and size have become even more important requirements for IPO exits since the crisis. And thus PE firms that fail to make operating improvements in their portfolio companies are likely to find their exit options limited.",
author = "Emil Plagborg-M{\o}ller and Morten Holm",
year = "2017",
doi = "10.1111/jacf.12225",
language = "English",
volume = "29",
pages = "115--121",
journal = "Journal of Applied Corporate Finance",
issn = "1078-1196",
publisher = "Wiley-Blackwell",
number = "1",

}

IPO or SBO? The Increasing Importance of Operational Performance for Private Equity Exits Following the Global Financial Crisis of 2007-08. / Plagborg-Møller, Emil; Holm, Morten.

In: Journal of Applied Corporate Finance, Vol. 29, No. 1, 2017, p. 115-121.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - IPO or SBO?

T2 - The Increasing Importance of Operational Performance for Private Equity Exits Following the Global Financial Crisis of 2007-08

AU - Plagborg-Møller, Emil

AU - Holm, Morten

PY - 2017

Y1 - 2017

N2 - The authors report the findings of their recent study of the role of portfolio company operating performance in determining the choice of exit options by private equity firms between initial public offerings (IPOs) and secondary buyouts (SBOs), and how that role may have changed since the Global Financial Crisis of 2007–2008. Virtually all studies of PE exits in all countries have found that portfolio companies that exit through IPOs tend to be larger and have higher operating returns than companies that exit through SBOs or sales to other companies. After examining the exits of PE portfolio companies based in Denmark and Sweden during the period 2003–2013, the authors report that, although general market conditions continue to be a major factor, operating performance and size have become even more important requirements for IPO exits since the crisis. And thus PE firms that fail to make operating improvements in their portfolio companies are likely to find their exit options limited.

AB - The authors report the findings of their recent study of the role of portfolio company operating performance in determining the choice of exit options by private equity firms between initial public offerings (IPOs) and secondary buyouts (SBOs), and how that role may have changed since the Global Financial Crisis of 2007–2008. Virtually all studies of PE exits in all countries have found that portfolio companies that exit through IPOs tend to be larger and have higher operating returns than companies that exit through SBOs or sales to other companies. After examining the exits of PE portfolio companies based in Denmark and Sweden during the period 2003–2013, the authors report that, although general market conditions continue to be a major factor, operating performance and size have become even more important requirements for IPO exits since the crisis. And thus PE firms that fail to make operating improvements in their portfolio companies are likely to find their exit options limited.

UR - https://sfx-45cbs.hosted.exlibrisgroup.com/45cbs?url_ver=Z39.88-2004&url_ctx_fmt=info:ofi/fmt:kev:mtx:ctx&ctx_enc=info:ofi/enc:UTF-8&ctx_ver=Z39.88-2004&rfr_id=info:sid/sfxit.com:azlist&sfx.ignore_date_threshold=1&rft.object_id=3160000000000046

U2 - 10.1111/jacf.12225

DO - 10.1111/jacf.12225

M3 - Journal article

VL - 29

SP - 115

EP - 121

JO - Journal of Applied Corporate Finance

JF - Journal of Applied Corporate Finance

SN - 1078-1196

IS - 1

ER -