This thesis examines public-to-private leveraged buyouts (LBOs) in Europe
that occurred between 1998 and 2011. Using a sample of 127 companies that
went private through LBO, we investigate both the value gains generated to the
pre-buyout shareholders of target companies and the sources of these variations
in the stock performance. The results of the cross-sectional regression analysis
support the agency cost and information asymmetry theories, as companies
with high free cash flow or companies that have been undervalued by the
market tend to reap strong abnormal returns. In addition, using a sample of 72
buyout firms with sufficient financial data and a matched-control sample of
peer groups, we examine, through logistic regression methodology, the
determinants that affect the likelihood of public-to-private buyout transactions.
The findings are consistent with the free cash flow theory, as mature companies
with excess cash seem to be more likely candidates for such deals.
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