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

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tablesTable 6: Poisson model of patent counts with fixed effects (excluding divisional buyouts)(1) (2) (3) (4) (5) (6) (7) (8) (9)Early Early Early Early EarlyFull Full Before Before and late and late and late and late and lateSample Sample 1999 1999 patenting patenting patenting patenting patentingYear andYear Fixed Firm Fixed Year Fixed Firm Fixed Year Fixed Firm Fixed Year Fixed Firm Fixed Firm FixedEffect Effect Effect Effect Effect Effect Effect Firm EffectsEvent Year -3 1.128** 1.177*** 0.298*** 0.601*** 0.865** 1.614***(0.059) (0.058) (0.049) (0.072) (0.054) (0.093)Event Year -2 1.115** 1.226*** 0.512*** 0.734*** 0.852** 1.403***(0.057) (0.060) (0.077) (0.082) (0.054) (0.083)Event Year -1 1.078 1.198*** 0.632*** 0.878 0.930 1.273***(0.055) (0.059) (0.084) (0.094) (0.059) (0.077)Event Year 1 0.939 0.863*** 1.203 0.957 1.016 0.767***(0.051) (0.047) (0.141) (0.100) (0.074) (0.054)Event Year 2 0.902* 0.857*** 1.335** 0.899 1.244*** 0.784***(0.052) (0.050) (0.167) (0.095) (0.098) (0.060)Event Year 3 0.721*** 0.649*** 1.389** 0.782** 1.462*** 0.667***(0.048) (0.043) (0.191) (0.086) (0.127) (0.057)Event Year 4 0.664*** 0.570*** 1.438** 0.723*** 1.368*** 0.515***(0.049) (0.043) (0.226) (0.081) (0.145) (0.053)Event Year 5 0.613*** 0.514*** 1.060 0.713*** 1.924*** 0.726***(0.053) (0.045) (0.195) (0.081) (0.213) (0.079)Post LBO Dummy 1.373*** 0.537*** 0.999(0.056) (0.020) (0.068)Observations 2,953 2,956 744 747 972 975 972 975 975Standard errors in parentheses* significant at 10%; ** significant at 5%; *** significant at 1%NOTE: The sample consists of 6,398 patents awarded up to May 2007 to 495 firms that received private equity backing between 1980 and 2005. Firmsand patents are only included in the sample if patents were applied for between three years before and five years after the private equity investment. Theunit of observation is each patent in the sample for which originality and generality can be computed. The dependent variables are the originality andgenerality of the patents. The table reports incidence rate ratios.Table 7: Univariate tests of differences in patent citationsPanel A: Comparing patents in well- and poorly populatedpatent classes prior to the PE investmentMean for Mean for p-Value,[-3,0] [+1,+5] t-TestCitations in First Three YearsIn Well-Populated Classes 2.17 3.60 0.000In Poorly Populated Classes 1.68 1.69 0.956Relative Citations in First 3 YearsIn Well-Populated Classes 0.42 1.86 0.000In Poorly Populated Classes ‐0.06 -0.06 0.956Panel B: Comparing patents in growing and shrinkingpatent classes around time of the PE investmentMean for Mean for p-Value,[-3,0] [+1,+5] t-TestCitations in First Three YearsIn Growing Classes 2.30 2.68 0.068In Shrinking Classes 1.81 1.86 0.824Relative Citations in First 3 YearsIn Growing Classes 0.55 0.93 0.069In Shrinking Classes 0.07 0.11 0.824NOTE: The sample consists of 6,398 patents awarded up to May 2007to 495 firms that received private equity backing between 1980 and2005. Firms and patents are only included in the sample if patents wereapplied for between three years before and five years after the privateequity investment. The comparisons in the table above are made at theindividual patent level. We divide the patents by whether the share of thefirm’s patents prior to the private equity investment in the given patentclass was above or below the median, and by whether the share of thefirm’s patents in the class after the buyout was greater or less or equal tothat prior to the transaction.Table 8: Negative binomial regressions with controls forpatent class share(1) (2) (3) (4)Post LBO Dummy 0.989 0.952 1.414*** 1.327***(0.066) (0.073) (0.077) (0.081)Share of Firm’s 1.283*** 1.732***Pre-Investment Patents (0.118) (0.229)in ClassPost LBO* Share… 3.669*** 4.389***(0.657) (0.987)Change in Firm’s Patent 1.207** 1.323in Class Pre- and (0.109) (0.288)Post-InvestmentPost LBO* Change… 0.570*** 2.666**(0.106) (1.214)Observations 4,063 2,883 4,063 2,883Standard errors in parentheses* significant at 10%; ** significant at 5%; *** significant at 1%NOTE: The sample consists of 6,398 patents awarded up to May 2007to 495 firms that received private equity backing between 1980 and2005. Firms and patents are only included in the sample if patents wereapplied for between three years before and five years after the privateequity investment. The unit of observation is each patent class in whicha firm received a patent in the three calendar years prior to that of theinvestment. The dependent variable is the share of patents in that classafter the investment. The table reports incidence rate ratios.40 Large-sample studies: Long-run investmentThe Global Economic Impact of Private Equity Report 2008
figuresFigure 1: Number of private equity investmentsand patents granted in samplePatents gained1,000800600400LBOs100806040Figure 3: Mean citations in first three years for patentsin same class and grant year1086420020201985 1990 1995 2000 2005Patents grantedLBOsYearNOTE: The sample consists of 6,398 patents awarded up toMay 2007 to 495 firms that received private equity backing between1980 and 2005. Firms and patents are only included in the sample ifpatents were applied for between three years before and five yearsafter the private equity investment.Figure 2: Citations in first three years,by grant year of patent3 year citation count6000Citation intensities2.521985 1990 1995 2000 2005Figure 4: Citation intensities from negativebinomial regressionGrant yearNOTE: The sample consists of 6,398 patents awarded up toMay 2007 to 495 firms that received private equity backing between1980 and 2005. Firms and patents are only included in the sample ifpatents were applied for between three years before and five yearsafter the private equity investment.401.52001985 1990 1995 2000 2005YearNOTE: The sample consists of 6,398 patents awarded up toMay 2007 to 495 firms that received private equity backing between1980 and 2005. Firms and patents are only included in the sample ifpatents were applied for between three years before and five yearsafter the private equity investment.1-4 -2 0 2 4 6Event yearConfidence intervalPoint estimateNOTE: The sample consists of 6,398 patents awarded up toMay 2007 to 495 firms that received private equity backing between1980 and 2005. Firms and patents are only included in the sample ifpatents were applied for between three years before and five yearsafter the private equity investment. The chart presents the incidencerate ratios and two standard deviation confidence intervals from thepatent timing variables in the fourth regression in Table 3.The Global Economic Impact of Private Equity Report 2008 Large-sample studies: Long-run investment 41
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 and 42: Table 7: Ultimate staying power of
Page 43 and 44: Appendix 1: Imputed enterprise valu
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: Table 4: Relative citation intensit
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
Page 95 and 96: Figure 3:This figure represents the
Page 97 and 98: TablesTable 1: Company size descrip
Page 99 and 100: Table 5: Changes in the board size,
Page 101 and 102: Table 7: Board turnoverPanel A: Siz
Page 103 and 104: Part 2Case studiesThe Global Econom
Page 105 and 106: European private equity cases: intr
Page 107 and 108: Exhibit 1: Private equity fund size
Page 109 and 110:
Messer Griesheimann-kristin achleit
Page 111 and 112:
ealized it was not possible to grow
Page 113 and 114:
The deal with Allianz Capital partn
Page 115 and 116:
the deal, the private equity invest
Page 117 and 118:
Exhibit 1: The Messer Griesheim dea
Page 119 and 120:
Exhibit 5: Post buyout structureMes
Page 121 and 122:
New Lookann-kristin achleitnerTechn
Page 123 and 124:
feet. This restricted store space w
Page 125 and 126:
institutional investors why this in
Page 127 and 128:
Although a public listing did not a
Page 129 and 130:
Exhibit 5: Employment development a
Page 131 and 132:
Chinese private equity cases: intro
Page 133 and 134:
Hony Capital and China Glass Holdin
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Hony’s Chinese name means ambitio
Page 137 and 138:
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
Page 143 and 144:
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
Page 155 and 156:
Exhibit 1: Summary information on 3
Page 157 and 158:
Exhibit 6: An excerpt from the 180-
Page 159 and 160:
Indian private equity cases: introd
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ICICI Venture and Subhiksha *Lily F
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investment,” recalled Deshpande.
Page 165 and 166:
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
Page 177 and 178:
Exhibit 4B: Bharti cellular footpri
Page 179 and 180:
Exhibit 6: Summary of Bharti’s fi
Page 181 and 182:
Exhibit 7: Bharti’s board structu
Page 183 and 184:
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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