Determinants of Target Firm's Likelihood to Enter Public-to-Private Deals: Evidence from Developed Capital Markets

The current study investigates the determinants of going private through leveraged buyout on developed capital markets. It contrasts a sample of 735 firms that entered public-to-private transactions between 1997 and 2018 with a sample of matched firms that remain public during the same period. We have examined a large set of financial, macroeconomic and corporate governance variables in order to reveal the abovementioned likelihood. The results indicate that American LBO targets can be considered as innovative companies investing in their future growth opportunities, while European and Asian are quite in line with “typical” LBO candidate profile: stable, mature companies with low cash flow volatility. Moreover, our evidence suggests that a pre-buyout capital structure of the target does not significantly influence the probability to participate in leveraged buyout.