Private Equity Acquisitions of Continental European Firms - The Impact of Ownership and Control on the Likelihood of Being Taken Private

Abstract

This paper studies the motives behind private equity acquisitions of publicly listed firms in continental Europe. As corporate control and ownership in continental Europe tend to be highly concentrated, we argue that it is important to take into account the incentives of the incumbent large shareholder to monitor the management and the private benefits of control the latter may derive from the firm when measuring the likelihood of the firm being taken over by a private equity investor. We find strong and consistent evidence that both have a significant impact on the likelihood of a private equity acquisition.