Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
What determines leverage in leveraged buyouts?: A study of debt levels in European LBOs
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

This paper examines the main drivers of leverage levels in private equity-sponsored leveraged buyouts (LBOs). In order to find out what drives LBO leverage, we analyse deal financing of 71 European LBO deals completed between 2005 and 2015. By conducting univariate t-test and multiple regression analysis, we analyse the predictive power of a number of classical capital structure determinants (i.e. firm-specific factors) on levels of debt financing in LBOs. In addition, the state of the credit market is considered as a potential determinant of LBO leverage. We find that credit market conditions have a significant effect on levels of debt financing in LBOs and suggest that the market timing theory can explain LBO leverage better than classical leverage determinants, i.e. firm specific factors derived from classical capital structure theories. The results also indicate a negative relationship between target firms’ tax rate and LBO leverage. We also find that target firms’ free cash flow prior to buyout has no significant impact on leverage in LBOs, something that contradicts much previous research.

Place, publisher, year, edition, pages
2019. , p. 52
Keywords [en]
Leveraged buyout, LBO, leverage, capital structure, private equity
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-388942OAI: oai:DiVA.org:uu-388942DiVA, id: diva2:1336017
Educational program
Master Programme in Business and Management
Supervisors
Examiners
Available from: 2019-07-09 Created: 2019-07-08 Last updated: 2019-07-09Bibliographically approved

Open Access in DiVA

fulltext(572 kB)39 downloads
File information
File name FULLTEXT01.pdfFile size 572 kBChecksum SHA-512
165f9f2049f61c39637744439afcff7f7d66693edff962d82bd8d62fd4cf67eed7313f25d72e1e445ce4efb56bf105e3d3d7351d7e7cb41ea6119b9875a9d021
Type fulltextMimetype application/pdf

By organisation
Department of Business Studies
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 39 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 130 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf