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

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figuresFigure 4:Age distribution for LBOsThis figure shows the age distribution of the different typesof directors.Frequency250200Figure 5:Average board size over relative timeThis figure shows how the size of the board changesover time, distinguishing between LBOs, MBOs and othertransactions. Year 0 is the year in which the buyout takesplace. The chart shows, for example, that in year 4 afterthe buyout LBOs had on average a board of five people.The average is taken over all the LBOs that have not beenexited by year 5.Average board size101509810075065040 50 60 MoreAge of directors43CEO & managementIndependentLBO group2-5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10BuyoutYearLBOMBOOtherFigure 6:Evolution of board composition for LBOsThis figure shows the evolution of the board composition for LBOs. Year 0 is the year in which the LBO takes place.The figure shows the average percentage of three groups of directors (with respect to the total number of directors):management (composed of CEO, management and other insiders), outside directors and LBO sponsors. Theaverage in, for example, year 5 is taken over all the LBOs that have not been exited by year 5.Percentage6050403020100-5-4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7 +8 +9 +10BuyoutYearManagement Outsiders LBO sponsors78 Large-sample studies: Corporate governanceThe Global Economic Impact of Private Equity Report 2008
TablesTable 1: Company size descriptive statistics ($million)This table represents some statistics about the size of thecompanies in the sample. Size is computed as the enterprisevalue implied by the price paid to take the company private.For two MBOs we do not have such information andtherefore they are not represented in this table.Obs Mean Std. Dev. Min Max MedianLBOs 88 327.86 685.70 0.41 5,300.00 105.47MBOs 40 55.16 73.22 0.49 379.00 23.61Other 12 985.00 2,192.01 8.91 7,741.58 75.30Table 2: Change in the board sizeThis table shows the change in the average board size whenthe firm is taken private. We measure the average board sizeof the last board before the company is taken private (before)and of the second board observed after the company istaken private (after). T‐statistics of the difference betweenLBOs and MBOs and of the difference between the boardbefore and after are provided. Panel A reports statistics for allMBOs and LBOs. For one LBO we do not observe the boardafter the company is taken private, therefore that LBO is notrepresented in this table. Panel B selects 39 MBOs and 39LBOs, matched by size. Panel C considers LBOs only andcompares cases where the CEO changes after the buyout tocases where the CEO does not change.Panel A: MBOs vs LBOs(m) (l) (m) - (l)MBO LBO t-statn=54 n=87(b) Before 6.22 6.51 -0.88(a) After 4.24 5.43 -3.16(b) - (a) t-stat 4.90 3.81(m) (l) (m) - (l)Change in size MBO LBO t-statafter event 1.98 1.08 2.00Panel B: MBOs vs LBOs, matched sample(m) (l) (m) - (l)MBO LBO t-statn=39 n=39(b) Before 6.59 6.10 1.21(a) After 4.44 4.84 -0.97(b) - (a) t-stat 4.88 3.30(m) (l) (m) - (l)Change in size MBO LBO t-statafter event 2.15 1.26 1.64Panel C: No CEO change vs CEO change (LBOs only)(m) (l) (m) - (l)No CEOCEOChange Change t-statn=40 n=45(b) Before 6.58 6.53 0.11(a) After 5.18 5.67 -1.09(b) - (a) t-stat 3.22 2.26(m) (l) (m) - (l)No CEOCEOchange change t-statChange in sizeafter event 1.40 0.87 1.14The Global Economic Impact of Private Equity Report 2008 Large-sample studies: Corporate governance 79
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The Globalization of Alternative In
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ContributorsCo-editorsAnuradha Guru
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PrefaceKevin SteinbergChief Operati
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Letter on behalf of the Advisory Bo
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Executive summaryJosh lernerHarvard
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• Private equity-backed companies
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C. Indian casesThe two India cases,
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Part 1Large-sample studiesThe Globa
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The new demography of private equit
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among US publicly traded firms, it
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should be fairly complete. While th
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according to Moody’s (Hamilton et
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draining public markets of firms. I
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FIguresFigure 1A: LBO transactions
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TablesTable 1: Capital IQ 1980s cov
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Table 2: Magnitude and growth of LB
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Table 4: Exits of individual LBO tr
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Table 6: Determinants of exit succe
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Table 7: Ultimate staying power of
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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 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
Page 95: Figure 3:This figure represents the
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
Page 135 and 136: Hony’s Chinese name means ambitio
Page 137 and 138: Establishing early agreement on pos
Page 139 and 140: Executing the IPOEach of the initia
Page 141 and 142: Exhibit 1A: Summary of Hony Capital
Page 143 and 144: Exhibit 4: Members of the China Gla
Page 145 and 146: 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
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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
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Exhibit 3: Subhiksha’s board comp
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Warburg Pincus and Bharti Tele‐Ve
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founded two companies at this time
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By 2003 this restructuring task was
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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
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consumer products. She was also a R
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AcknowledgementsJosh LernerHarvard
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The World Economic Forum is an inde
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