Private equity buyout pricing, returns, and portfolio firm performance across UK regions

Abstract

Prior empirical investigations of private equity activity indicates that it is concentrated in central financial hubs. Using comprehensive UK data on deal valuations, companies’ financial performance, and estimates of returns on buyout transactions, we study regional variations in deal pricing, portfolio firm performance, and deal returns. Our findings show that PE sponsors pay higher valuations for buyout targets in London and the South East relative to other UK regions. However, portfolio companies located in London and the South East do not exhibit greater gains in productivity and operating performance than their peers in peripheral regions. Our results also suggest that buyout returns are similar across UK regions.