The Global Economic Impact of Private Equity Report 2008 - World ...

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TablesTable 9: Determinants of staying power of LBOsThis table shows the results from logit regressions of the likelihood of a the firm leaving LBO status on deal and sponsorcharacteristics as well as country and time fixed effects. For the deal type, the omitted variable is “Independent private firm”,and for the time fixed effects, the omitted category is “1970–1984.” For the dummy variables, the coefficients are the changein probability (in %) of changing the value from 0 to 1, and for the other variables it is the effect of a marginal increase of oneunit. P-values are calculated using White robust standard errors (STDE).(1) (2) (3)Firm exited Firm exited Firm exitedLBO ownership LBO ownership LBO ownershipDependent variable within 9 years within 9 years within 5 yearsdY/dX STDE P-value dY/dX STDE P-value dY/dX STDE P-valuePublic-to-private 1.692 3.821 0.658 -4.831 4.075 0.236 -3.678 2.049 0.073Divisional 9.226 2.009 0.000 7.204 2.068 0.000 3.482 1.209 0.004Secondary -0.250 5.943 0.966 -3.853 5.952 0.517 2.801 3.204 0.382Distressed 8.847 6.588 0.179 9.122 6.805 0.180 8.026 4.243 0.059Financial sponsor dummy 25.165 4.189 0.000 21.948 4.477 0.000 13.623 1.529 0.000Yrs of sponsor experience 1.081 0.156 0.000 0.863 0.161 0.000 0.412 0.090 0.000Syndicated deal 11.096 2.012 0.000 8.640 2.087 0.000 4.269 1.280 0.001Public fund sponsor -10.582 2.952 0.000 -8.309 2.999 0.006 -4.351 1.591 0.006Log EV, imputed 4.235 0.752 0.000 2.151 0.424 0.000US 5.949 4.377 0.174 3.662 4.457 0.411 0.186 2.181 0.932Canada 15.168 7.091 0.032 12.677 7.479 0.090 5.998 4.629 0.195UK 4.636 4.642 0.318 5.675 4.685 0.226 0.500 2.380 0.834Continental Europe -7.117 4.858 0.143 -8.125 4.896 0.097 -7.487 2.108 0.000Scandinavia 18.241 5.473 0.001 16.198 5.748 0.005 1.837 3.399 0.5891985-89 -1.681 5.278 0.750 -4.001 5.343 0.454 -9.941 3.072 0.0011990-95 -1.830 4.986 0.714 -1.030 5.022 0.837 -2.588 3.619 0.4751996-99 -13.205 4.794 0.006 -11.729 4.857 0.016 -11.717 3.494 0.0012000-02 -15.386 3.310 0.000N = 4,070 Ps.R2 = 0.05 N = 4,068 Ps.R2 = 0.05 N = 8,569 Ps.R2 = 0.05(4) (5) (6)Firm exited Firm exited Firm exitedLBO ownership to public market to public marketwithin 3 years (1970-2002 deals only) (1970-2002 deals only)dY/dX STDE P-value dY/dX STDE P-value dY/dX STDE P-valuePublic-to-private -2.430 1.285 0.059 2.427 1.374 0.077 -1.944 0.936 0.038Divisional 2.476 0.774 0.001 2.062 0.705 0.003 0.429 0.635 0.499Secondary 0.756 1.797 0.674 0.551 2.053 0.788 -1.426 1.520 0.348Distressed 1.429 2.323 0.538 -0.421 2.356 0.858 -0.310 2.237 0.890Financial sponsor dummy 7.127 0.928 0.000 3.472 1.113 0.002 1.135 1.377 0.410Yrs of sponsor experience 0.212 0.057 0.000 0.433 0.049 0.000 0.289 0.050 0.000Syndicated deal 2.829 0.841 0.001 6.754 0.902 0.000 4.251 0.815 0.000Public fund sponsor -3.009 0.999 0.003 -2.254 0.805 0.005 -0.933 0.864 0.281Log EV, imputed 0.942 0.275 0.001 2.583 0.241 0.000US 0.733 1.341 0.585 -3.381 1.209 0.005 -4.277 1.196 0.000Canada 1.836 2.792 0.511 0.590 2.441 0.809 -0.120 2.185 0.956UK -0.418 1.452 0.773 -5.993 0.860 0.000 -5.069 0.873 0.000Continental Europe -3.007 1.317 0.022 -5.105 0.870 0.000 -5.021 0.819 0.000Scandinavia -1.447 1.939 0.456 -3.006 1.323 0.023 -3.370 1.146 0.0031985-89 -3.160 2.441 0.196 -1.836 1.162 0.114 -2.726 0.994 0.0061990-95 2.005 2.998 0.504 -4.453 0.935 0.000 -3.861 0.938 0.0001996-99 -2.347 2.541 0.356 -13.041 1.376 0.000 -11.637 1.351 0.0002000-02 -7.399 2.299 0.001 -13.712 0.912 0.000 -12.176 0.901 0.0002003-05 -4.331 2.355 0.066N = 11,761 Ps.R 2 = 0.04 N=8,863 Ps.R 2 = 0.11 N = 8,856 Ps.R 2 = 0.1324 Large-sample studies: DemographyThe Global Economic Impact of Private Equity Report 2008
Appendix 1: Imputed enterprise valuesThis table displays the results from a Heckman (1979)maximum likelihood estimation of the log Enterprise Value inthe LBO transaction on independent variables. The predictedvalues from this regression are used to calculate imputedvaluations for the observation where enterprise value ismissing. For the dummy variables measuring LBO type andlocation, the omitted categories are “Public-to-private” and“Africa/Middle East,” respectively.Dependent variable:Log (Enterprise Value) (Number of uncensored obs. = 8,959)Coefficient Stdev P-valuePrivate to private -1.321 0.165 0.000Divisional -0.860 0.106 0.000Financial vendor -0.244 0.136 0.072Distressed -1.590 0.136 0.000Financial sponsor 0.964 0.066 0.000Public investment fund -0.342 0.061 0.000Indep. private investment fund 0.217 0.049 0.000Age of financial sponsor 0.040 0.004 0.000Sponsor with >20 deals 0.318 0.056 0.000Syndicated transaction 0.560 0.052 0.000Asia 0.717 0.161 0.000Australia 0.162 0.182 0.373Continental Europe 0.341 0.146 0.019Canada 0.284 0.172 0.098Eastern Europe -0.424 0.182 0.020Latin America 0.624 0.212 0.003Scandinavia 0.459 0.175 0.009UK -0.096 0.134 0.473US 0.577 0.137 0.000Year Fixed EffectsIndustry Fixed EffectsYesYesSelection model (N = 21,366)Private to private -1.679 0.046 0.000Divisional -1.103 0.046 0.000Financial vendor -1.357 0.050 0.000Distressed -1.013 0.071 0.000Asia -0.094 0.097 0.333Australia -0.029 0.110 0.792Continental Europe -0.532 0.081 0.000Canada -0.303 0.099 0.002Eastern Europe -0.183 0.102 0.074Latin America -0.124 0.121 0.306Scandinavia -0.674 0.090 0.000UK 0.118 0.081 0.148US -0.398 0.080 0.000Syndicated transaction 0.297 0.024 0.000Public investment fund 0.179 0.035 0.000Independent private investment fund 0.036 0.027 0.182Age of financial sponsor 0.023 0.002 0.000Financial sponsor 0.189 0.033 0.000LBO post-1990 -0.061 0.054 0.258LBO post-1997 -0.100 0.036 0.005LBO post-2000 0.137 0.029 0.000LBO post-2004 -0.317 0.023 0.000Constant 1.242 0.101 0.000The Global Economic Impact of Private Equity Report 2008 Large-sample studies: Demography 25
Page 2 and 3: The Globalization of Alternative In
Page 5: ContributorsCo-editorsAnuradha Guru
Page 9 and 10: PrefaceKevin SteinbergChief Operati
Page 11 and 12: Letter on behalf of the Advisory Bo
Page 13 and 14: Executive summaryJosh lernerHarvard
Page 15 and 16: • Private equity-backed companies
Page 17 and 18: C. Indian casesThe two India cases,
Page 19 and 20: Part 1Large-sample studiesThe Globa
Page 21 and 22: The new demography of private equit
Page 23 and 24: among US publicly traded firms, it
Page 25 and 26: should be fairly complete. While th
Page 27 and 28: according to Moody’s (Hamilton et
Page 29 and 30: draining public markets of firms. I
Page 31 and 32: FIguresFigure 1A: LBO transactions
Page 33 and 34: TablesTable 1: Capital IQ 1980s cov
Page 35 and 36: Table 2: Magnitude and growth of LB
Page 37 and 38: Table 4: Exits of individual LBO tr
Page 39 and 40: Table 6: Determinants of exit succe
Page 41: Table 7: Ultimate staying power of
Page 45 and 46: Private equity and long-run investm
Page 47 and 48: alternative names associated with t
Page 49 and 50: 4. Finally, we explore whether firm
Page 51 and 52: When we estimate these regressions,
Page 53 and 54: cutting back on the number of filin
Page 55 and 56: Table 1: Summary statisticsPanel D:
Page 57 and 58: Table 4: Relative citation intensit
Page 59 and 60: figuresFigure 1: Number of private
Page 61 and 62: Private equity and employment*steve
Page 63 and 64: Especially when taken together, our
Page 65 and 66: centred on the transaction year ide
Page 67 and 68: and Vartia 1985.) Aggregate employm
Page 69 and 70: sectors. In Retail Trade, the cumul
Page 71 and 72: employment-weighted acquisition rat
Page 73 and 74: FIguresFigure 1: Matches of private
Page 75 and 76: Figure 6:Figure 6A: Comparison of n
Page 77 and 78: Figure 8:Figure 8A: Comparison of j
Page 79 and 80: Figure 11: Variation in impact in e
Page 81 and 82: Figure 12: Differences in impact on
Page 83 and 84: Private equity and corporate govern
Page 85 and 86: et al (2007) track the evolution of
Page 87 and 88: groups aim to improve firm performa
Page 89 and 90: distribution of the LBO sponsors, m
Page 91 and 92: the most difficult cases. This stor
Page 93 and 94:
to see whether these changes of CEO
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Figure 3:This figure represents the
Page 97 and 98:
TablesTable 1: Company size descrip
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Table 5: Changes in the board size,
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Table 7: Board turnoverPanel A: Siz
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Part 2Case studiesThe Global Econom
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European private equity cases: intr
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Exhibit 1: Private equity fund size
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Messer Griesheimann-kristin achleit
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ealized it was not possible to grow
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The deal with Allianz Capital partn
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the deal, the private equity invest
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Exhibit 1: The Messer Griesheim dea
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Exhibit 5: Post buyout structureMes
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New Lookann-kristin achleitnerTechn
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feet. This restricted store space w
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institutional investors why this in
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Although a public listing did not a
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Exhibit 5: Employment development a
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Chinese private equity cases: intro
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Hony Capital and China Glass Holdin
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Hony’s Chinese name means ambitio
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Establishing early agreement on pos
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Executing the IPOEach of the initia
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Exhibit 1A: Summary of Hony Capital
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Exhibit 4: Members of the China Gla
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Exhibit 6A: China Glass post‐acqu
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Exhibit 8: China Glass stock price
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3i Group plc and Little Sheep*Lily
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y an aggressive franchise strategy,
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soul” of the business. But there
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Exhibit 1: Summary information on 3
Page 157 and 158:
Exhibit 6: An excerpt from the 180-
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Indian private equity cases: introd
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ICICI Venture and Subhiksha *Lily F
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investment,” recalled Deshpande.
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2005 - 2007: Moderator, protector a
Page 167 and 168:
Exhibit 3: Subhiksha’s board comp
Page 169 and 170:
Warburg Pincus and Bharti Tele‐Ve
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founded two companies at this time
Page 173 and 174:
By 2003 this restructuring task was
Page 175 and 176:
Exhibit 1C: Private equity investme
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Exhibit 4B: Bharti cellular footpri
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Exhibit 6: Summary of Bharti’s fi
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Exhibit 7: Bharti’s board structu
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In the 1993‐94 academic year, he
Page 185 and 186:
consumer products. She was also a R
Page 187 and 188:
AcknowledgementsJosh LernerHarvard
Page 189:
The World Economic Forum is an inde
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