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Cross-border buyout pricing

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Cross-border buyout pricing. / Hammer, Benjamin; Janssen, Nils; Schwetzler, Bernhard.
In: Journal of Business Economics, Vol. 91, No. 5, 31.07.2021, p. 705-731.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Hammer, B, Janssen, N & Schwetzler, B 2021, 'Cross-border buyout pricing', Journal of Business Economics, vol. 91, no. 5, pp. 705-731. https://doi.org/10.1007/s11573-020-01021-w

APA

Hammer, B., Janssen, N., & Schwetzler, B. (2021). Cross-border buyout pricing. Journal of Business Economics, 91(5), 705-731. https://doi.org/10.1007/s11573-020-01021-w

Vancouver

Hammer B, Janssen N, Schwetzler B. Cross-border buyout pricing. Journal of Business Economics. 2021 Jul 31;91(5):705-731. Epub 2020 Dec 23. doi: 10.1007/s11573-020-01021-w

Author

Hammer, Benjamin ; Janssen, Nils ; Schwetzler, Bernhard. / Cross-border buyout pricing. In: Journal of Business Economics. 2021 ; Vol. 91, No. 5. pp. 705-731.

Bibtex

@article{1a2feb204cea4450bc0edfbdebdf29a1,
title = "Cross-border buyout pricing",
abstract = "Using a dataset of 1149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples narrows when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs.",
keywords = "Private equity, Leveraged buyout, Cross-border, Liability of foreignness, Valuation",
author = "Benjamin Hammer and Nils Janssen and Bernhard Schwetzler",
year = "2021",
month = jul,
day = "31",
doi = "10.1007/s11573-020-01021-w",
language = "English",
volume = "91",
pages = "705--731",
journal = "Journal of Business Economics",
issn = "1861-8928",
publisher = "Betriebswirtschaftlicher Verlag Dr. Th. Gabler GmbH",
number = "5",

}

RIS

TY - JOUR

T1 - Cross-border buyout pricing

AU - Hammer, Benjamin

AU - Janssen, Nils

AU - Schwetzler, Bernhard

PY - 2021/7/31

Y1 - 2021/7/31

N2 - Using a dataset of 1149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples narrows when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs.

AB - Using a dataset of 1149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples narrows when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs.

KW - Private equity

KW - Leveraged buyout

KW - Cross-border

KW - Liability of foreignness

KW - Valuation

U2 - 10.1007/s11573-020-01021-w

DO - 10.1007/s11573-020-01021-w

M3 - Journal article

VL - 91

SP - 705

EP - 731

JO - Journal of Business Economics

JF - Journal of Business Economics

SN - 1861-8928

IS - 5

ER -