Private Equity Buyouts and Exports: The Impact of Brexit on UK Firms

Abstract

This paper examines how private equity (PE) buyouts affect export activity among target firms around the Brexit period. Using data on UK firms for 2012–2019 and difference‐in‐differences estimations for matched target versus non‐target firms, we assess how the unprecedented Leave vote affects portfolio firms' internationalization. We find that following the referendum, PE buyout targets are more likely to engage in exporting and are in turn more likely to increase the value of their exports and their export intensity relative to their non‐PE‐backed peers. We further find evidence of an active governance channel, whereby the benefits of PE investment after Brexit are more potent when greater governance changes occur on boards of directors, and for firms whose senior directors have more international experience.