Targeted for Takeover: An Investigation of the Company-Specific Characteristics That Increase the Likelihood of Private Equity-Backed Public-to-Private Bids

Abstract

This thesis investigates the company-specific characteristics that influence the likelihood of receiving a private equity-backed public-to-private bids in the European market. Drawing on a comprehensive dataset of announced PE-backed PtP transaction bids between 2000 and 2023, the study employs logistic regression to assess the predictive power of financial and ownership based variables. The results demonstrate that PE investors tend to target publicly listed firms characterised by low stock liquidity, slow growth, dispersed ownership and low profitability. In contrast, traditional determinants such as undervaluation and leverage appear statistically insignificant, challenging hypotheses commonly found in literature from US and UK. Instead, the findings highlight the importance of agency resolution, suggesting that governance-related frictions such as insider control and blockholder resistance are key barriers to private equity-backed delisting bids. The thesis contributes to the corporate finance literature by refining existing theories of buyout motives and extending empirical evidence to the under-explored context of Europe. Practical implications are drawn for corporate managers, institutional investors, and regulators, while multiple robustness checks confirm the stability of results across macroeconomic cycles, regional subsamples, and transaction outcomes.