The Competitiveness of PE Funds in the M&A Market

This research is devoted to studying the role of private equity funds in the mergers and acquisitions market. Private equity funds acquire companies to actively manage its assets and to obtain high returns from an increase in its equity value. Competition for good assets between private equity firms and strategic investors is increasing. We study the reasons why vendors choose private equity funds as buyers for target companies characterized by a specific set of financial indicators. The theoretical part of the study analyzes the properties of PE funds, identifies the features of their activities in the M&A market, summarizes the conclusions regarding the impact of strategic and financial buyers on the effectiveness of the M&A deals. Empirical results are reflected in the second chapter of the paper. The sample consists of 2,688 transactions (acquisition of the major stake or buyouts) with companies from 51 countries for the period from 2005 to 2019. We found that the competitiveness of private equity funds lay in the ability to carry out LBO transactions with those companies that have the potential to achieve those characteristics that will subsequently be in the area of interests to strategic investors as a final goal.