Lloyd Blenman, Nischala Reddy

Open access

Leveraged Buyout Activity: A Tale of Developed and Developing Economies

  • Abstract

Informations and abstract

Keywords: LBOs, Returns, Reputed, Developing Economies, Uncertainty, Business Cycle, Exit Times; JEL Codes: F21; F44; G3; G15; G24

Returns on LBOs are on average higher for developed economies. However, returns of LBOs during high economic growth periods are high for developing economies relative to developed economies. On the other hand returns in developing nations are lower when compared to the returns in developed nations in periods of negative economic growth. Developing countries are more unstable relative to developed countries during conditions of boom as well as collapse. Exit times for LBO transactions in developing economies are therefore shorter relative to developed economies in periods of high positive (negative) economic growth rate. During periods of negative economic growth rate, LBOs in developing economies exit sooner. In periods of low or medium economic growth, LBOs in developing economies take longer to exit. Reputed firms and small firms have higher returns and exit sooner. Club deals have higher returns and exit sooner when compared with single PE firm deals. Club deals in developing economies are on average not profitable and exit sooner

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