Post-LBO Development Analysis of Changes in Strategy, Operations, an
The current financial crisis has intensified the discussion around buyouts and the related value creation of financial investors. Richard K. Lenz analyses how LBOs evolve after the financial investors have exited. Based on three case studies of former LBO
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GABLER RESEARCH Entrepreneurial and Financial Studies Herausgeber: Professor Dr. Dr. Ann-Kristin Achleitner und Professor Dr. Christoph Kaserer
Die Schriftenreihe präsentiert aktuelle Forschungsergebnisse aus dem Gebiet der Entrepreneurial und Corporate Finance. Sie greift an der Schnittstelle von Wissenschaft und Praxis innovative Fragestellungen der Unternehmensfinanzierung auf. This series presents research results from the fields of entrepreneurial and corporate finance. Its focus lies on innovative research topics at the interface of science and practice.
Richard K. Lenz
Post-LBO Development Analysis of Changes in Strategy, Operations, and Performance after the Exit from Leveraged Buyouts in Germany With a foreword by Prof. Dr. Christoph Kaserer
RESEARCH
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Dissertation Technische Universität München, 2009
Die Reihe erschien von 2003 bis 2007 im Verlag Wissenschaft & Praxis Dr. Brauner. 1st Edition 2010 All rights reserved © Gabler | GWV Fachverlage GmbH, Wiesbaden 2010 Editorial Office: Ute Wrasmann | Britta Göhrisch-Radmacher Gabler is part of the specialist publishing group Springer Science+Business Media. www.gabler.de No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder. Registered and/or industrial names, trade names, trade descriptions etc. cited in this publication are part of the law for trade-mark protection and may not be used free in any form or by any means even if this is not specifically marked. Cover design: KünkelLopka Medienentwicklung, Heidelberg Printed on acid-free paper Printed in Germany ISBN 978-3-8349-2163-5
Foreword Private Equity and leveraged buyouts have become common in Europe, including in particular Germany. They are a catalyst for corporate restructuring and growth. Over time, financial investors have started to exit their investments. The development of some former LBOs raises the question whether the financial investors traded longterm growth against short-term cash flow and expropriated value. Financial investors are further accused of reducing employment, cutting salaries, offshoring production, and leaving companies financially instable. Researchers have questioned the sustainability of performance improvement and tested changes in performance indicators. The findings confirm that the financial performance of former LBOs declines. The decline occurs with a time lag, but research fails to explain in detail its determinants of this decline. In particular, the decline seems to be caused by increase strategy diversification, the recurrence of inefficiencies and reduced management focus on efficiency. These observations are limited to companie
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