Equity Markets Do Not Fit All: an Analysis of Public-to-Private Deals in Continental Europe

Equity Markets Do Not Fit All: an Analysis of Public-to-Private Deals in Continental Europe

Concentration of family‐based ownership and recent development of private equity companies in Continental Europe suggest that the motivations and results of public‐to‐private (PTP) deals may differ from well‐studied cases in the USA and the UK. We overview the PTP market and measure the cumulative a...

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Bibliographic Details
Published in:European financial management : the journal of the European Financial Management Association 2012-11, Vol.18 (5), p.867-895
Main Authors: Geranio, Manuela, Zanotti, Giovanna
Format: Article
Language:eng
Subjects:
abnormal returns
Business ownership
CAR
Continental Europe
equity markets
Family owned businesses
G32
G34
Going private
Private equity
public-to-private deals
Return on investment
Securities analysis
Studies
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Summary:Concentration of family‐based ownership and recent development of private equity companies in Continental Europe suggest that the motivations and results of public‐to‐private (PTP) deals may differ from well‐studied cases in the USA and the UK. We overview the PTP market and measure the cumulative abnormal returns (CARs) of 106 PTP deals concluded in Continental Europe from 2000 to 2005, introducing a model to explain the abnormal returns. Our results partially confirm findings of previous studies, namely, that undervalued and smaller firms register higher CARs. We additionally find that deals promoted by family owners register higher abnormal returns, whereas financial investors and private operating firms show no impact.
ISSN:1354-7798
1468-036X