Board Interlocks and the Propensity to be Targeted in Private Equity Transactions / Toby Stuart, Soojin Yim.

Format:

Book

Author/Creator:

Stuart, Toby.

Contributor:

National Bureau of Economic Research.

Yim, Soojin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w14189.

NBER working paper series no. w14189

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

In this paper, we examine the propensity for U.S. public companies to become targets for private equity-backed, take-private transactions. We consider the characteristics of 483 private equity-backed deals in the 2000-2007 period relative to public companies, and find that, in addition to the financial drivers studied in previous works, board characteristics and director networks are also associated with deal generation. We find that a company that has a director who has had LBO experience through prior board service is ~40% more likely to receive a private equity offer, and that the strength of this effect varies with the influence of the director and the quality of the prior LBO experience. This effect is robust to the most likely alternative explanations and supports the idea that directors and social networks play an influential role in change-of-control transactions.

Notes:

Print version record

July 2008.