Asset Sales to Private Equity Funds : Shareholder Value Maximization on the Sell-Side?

In this paper, we analyze the question of whether companies that sell assets to private equity funds experience higher abnormal returns than companies that sell assets to buyers with strategic interests. Moreover, we investigate whether companies that sell assets to private equity investors have different changes in systematic risks than companies that sell to strategic buyers. Using data for asset sales in Germany, Switzerland and Austria and employing event study methodology, we find that the announcement of asset sales generally generates positive abnormal returns with the transactions where there is a private equity buyer having significantly higher abnormal returns compared to transactions where there is a strategic buyer. On the other hand, we find no evidence of changes in systematic risk, neither for the sample consisting of all transactions nor for the sub-samples of sales to private equity funds and strategic buyers, respectively.