Repository logo
  • English
  • Deutsch
Log In
or
  1. Home
  2. HSG CRIS
  3. HSG Publications
  4. Do Private Equity Funds Always Pay Less? A Synergy-Related Explanation Based on Add-on Acquisitions
 
  • Details

Do Private Equity Funds Always Pay Less? A Synergy-Related Explanation Based on Add-on Acquisitions

Series
School of Finance Working Paper Series
Type
working paper
Date Issued
2015-10
Author(s)
Morkötter, Stefan  
Wetzer, Thomas
Abstract
We assess the pricing of transactions undertaken by private equity (PE) funds in comparison to the transactions of strategic acquirers and sellers and focus on synergy gains as an explanatory factor. Controlling for company and deal characteristics, we show that PE funds pay 20% less, on average, than strategic buyers for comparable target corporations (we refer to this as the PE discount). Supplementing the existing literature on the PE discount in M&A transactions, we show that in add-on transactions, this PE discount disappears. When PE funds benefit from synergies, they are willing to pay the same price level as strategic acquirers would do in comparable transactions. In line with this synergy-related explanation, we find that PE funds sell their portfolio companies to strategic acquirers at prices comparable to those of strategic sellers. In divestitures to other PE funds (secondary deals), the PE discount prevails.
Language
English
Keywords
Private Equity
Corporate Finance
Mergers and Acquisitions
Takeover Premiums
Synergies
Add-on Acquisitions
HSG Classification
contribution to scientific community
Refereed
No
Publisher
SoF - HSG
Publisher place
St. Gallen
Number
2015/22
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/105892
Subject(s)

business studies

finance

Division(s)

SGI - St.Gallen Insti...

Eprints ID
245439
File(s)
Loading...
Thumbnail Image

open.access

Name

15_22a_Morkoetter et al_Do Private Equity Funds Always Pay Less.pdf

Size

420.28 KB

Format

Adobe PDF

Checksum (MD5)

87510f4283198cfd8724104d3e54e60e

here you can find instructions and news.

Built with DSpace-CRIS software - Extension maintained and optimized by 4Science

  • Privacy policy
  • End User Agreement
  • Send Feedback