Private Equity vs. PLC Boards in the U.K.: A Comparison of Practices and Effectiveness

Acharya, Viral V.; Kehoe, Conor; Reyner, Michael

doi:10.1111/j.1745-6622.2009.00215.x

Cited by 41 publications

(13 citation statements)

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“…2007). This is longer than the average investment in listed company stocks by institutional investors (Acharya, Kehoe, and Reyner 2009; Gottschalg 2007). Studies have found little evidence of short‐termism as a result of private equity ownership when measuring R&D, investment, and sustainability (Cumming, Siegel, and Wright 2007; Watt and Galgoczi 2009:203).…”

Section: Time To Exit Anglo‐saxon Investors and Foreign Investorsmentioning

confidence: 94%

The Impact of Private Equity on Management Practices in European Buy‐outs: Short‐termism, Anglo‐Saxon, or Host Country Effects?

Bacon¹,

Wright²,

Meuleman³

et al. 2012

Industrial Relations

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This is the published version of the paper.This version of the publication may differ from the final published version. This article explores the impact of private equity (PE) firms on human resource management practices in buy-outs using data drawn from the first representative pan-European survey into this issue. The findings suggest the overall impact of PE on high-performance work practices (HPWP) is affected more by length of the investment relationship than the countries where PE is going to or is coming from. PE investment results in the increased use of HPWP in buy-outs the longer the anticipated time to exit. With respect to the PE firms' country of origin, buyouts backed by Anglo-Saxon PE firms are as likely to introduce new HPWP (and are specifically more likely to extend performance-related pay schemes) as those backed by non-Anglo-Saxon PE firms, suggesting some adaptation to the local host country contexts of buy-outs. Permanent

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Section: Time To Exit Anglo‐saxon Investors and Foreign Investorsmentioning

confidence: 94%

The Impact of Private Equity on Management Practices in European Buy‐outs: Short‐termism, Anglo‐Saxon, or Host Country Effects?

Bacon¹,

Wright²,

Meuleman³

et al. 2012

Industrial Relations

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“…(2007), and Kaplan and Stromberg (2009) for comprehensive literature surveys). Evidence also points to governance advantages of PE firms’ boards compared to publicly listed companies (Acharya et al ., 2009).…”

Section: Private Equity Exit and Buy‐out Performancementioning

confidence: 99%

Exits, Performance, and Late Stage Private Equity: the Case of UK Management Buy‐outs

Jelic¹,

Wright²

2011

Euro Fin Management

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Using a hand-collected dataset of 1,225 buy-outs, we examine post buy-out and post exit long term abnormal operating performance of UK management buyouts, during the period 1980-2009. Our univariate and panel data analysis of post buy-out performance conclusively show positive changes in output. We also find strong evidence for improvements in employment and output and a lack of significant changes in efficiency and profitability following initial public offerings (IPO) exits. IPOs from the main London Stock Exchange (LSE) market outperform their counterparts from the Alternative Investment Market (AIM) only in terms of changes in output. For secondary management buy outs (SMBOs), performance declines during the first buy-out but in the second buy-out performance stabilises until year three, after which profitability and efficiency fall while employment increases. Although private equity (PE) backed buy-outs do not exhibit either post buy-out or post exit underperformance, they fail to over-perform their non-PE backed counterparts. In the subsample of buy-outs exiting via IPOs on the AIM, PE firms do not outperform non-PE buy-outs. Our findings highlight the importance

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“…Empirically, for a portfolio firm, diffusion of the PEBM template varies from formal adoption to vicarious learning and centres on the ability of investor‐owner‐managers to achieve ceremonial if not institutional alignment between investor‐owner interests, those of managers and workers in portfolio firms. As recent studies demonstrate downsizing, asset sales and financial engineering represent three areas of activity in which private equity investors exercise efficiencies in management practice over listed or other private firms (see Acharya et al ., 2009; Achleitner et al ., 2009; Bacon et al ., 2010). In the cases under consideration, asset sales were coercively diffused in all portfolio firms to represent a clear‐cut example of decisive restructuring by powerful outsiders.…”

Section: Discussionmentioning

confidence: 99%

“…Moreover, any debts incurred within portfolio firm restructuring and refinancing remain with the firm, not its current owners. While these strategies appear to represent a coherent ‘best practice’ to portfolio firm restructuring, firms that are not governed by the PEBM have successfully ‘mimicked’ strategies associated with the model to raise efficiency levels (Acharya et al ., 2009; Achleitner et al ., 2009). This suggests that diffusion of this ‘best practice’ in restructuring and financial engineering may be adopted by firms listed or otherwise which are not governed by the PEBM.…”

Section: Discussionmentioning

confidence: 99%

Templates for financial control? Management and employees under the private equity business model

Clark

2012

Human Res Mgmt Journal

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The term ‘private equity business model’ (PEBM) refers to private equity investors that delist publicly quoted firms, managing them as private equity‐controlled portfolio firms. But how and in what form do these investors diffuse a preferred template for the PEBM in portfolio firms? Is diffusion codified, institutionalised or merely tacit? What is the difference between these forms of diffusion? As a method of financial control, how is diffusion evident for managers and workers? Theoretically, while ‘financialisation’ is a contemporary pressure on the British economy, there is a ‘disconnection’ between competitive pressures for financialisation and the diffusion of practices to manage these pressures in portfolio firms. Forty‐two interviews in eight portfolio firms and five associated private equity firms concludes that potentially transformative and decisive restructuring for managers and workers is more evident than a defined template.

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Private Equity vs. PLC Boards in the U.K.: A Comparison of Practices and Effectiveness

Cited by 41 publications

References 0 publications

The Impact of Private Equity on Management Practices in European Buy‐outs: Short‐termism, Anglo‐Saxon, or Host Country Effects?

The Impact of Private Equity on Management Practices in European Buy‐outs: Short‐termism, Anglo‐Saxon, or Host Country Effects?

Exits, Performance, and Late Stage Private Equity: the Case of UK Management Buy‐outs

Templates for financial control? Management and employees under the private equity business model

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