@article{2b4a3bb7a8654270a82e817c7bb798a9,
title = "Divisional buyouts by private equity and the market for divested assets",
abstract = "We study the role and performance of private equity (PE) in corporate asset sales. Corporate sellers obtain significantly positive excess returns in PE deals, gains in wealth significantly greater than for intercorporate asset sales. Based on exit valuations for 98% of PE deals, we find gains in enterprise value in buyouts are significantly greater than for benchmark firms. Corporate seller excess returns are positively correlated with subsequent gains in asset enterprise value. A parsimonious auction model suggests that only restructuring capabilities of PE (not acquisition of undervalued assets) can explain the pattern of the gains generated in these PE deals.",
keywords = "Asset sales, Auction, Divisional buyouts, Private equity, Restructuring",
author = "Ulrich Hege and Stefano Lovo and Slovin, {Myron B.} and Marie Sushka",
note = "Funding Information: We would like to thank the editors, Jeff Netter and Douglas Cumming, and two anonymous referees for their suggestions. We are grateful to our discussants Ashwini Agraval, Fernando Anjos, Espen Eckbo, Alexander Gorbenko, Frederik Schlingemann, and Armin Schwienbacher as well as to Ken Ahern, and to audiences at WFA (Monterey), NYU/NY Fed Private Equity Conference, EFA (Copenhagen), LBS-Coller Institute Private Equity Conference, the ECCCS Workshop in Nice, Essec Private Equity Conference, ESSFM in Gerzensee, the SEC, and in Tilburg, Rotterdam, Toulouse, Vienna, Besancon, Cass Business School, Constance, Mannheim, Tel Aviv, Bergen, and Frankfurt. Stefano Lovo acknowledges financial support from ANR/Investissements d'Avenir under grant ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047. Publisher Copyright: {\textcopyright} 2018 Elsevier B.V.",
year = "2018",
month = dec,
doi = "10.1016/j.jcorpfin.2018.08.016",
language = "English (US)",
volume = "53",
pages = "21--37",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",
}