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Open Access: Journal of Business Economics, 23 December 2020

Authors: Benjamin Hammer, Nils Janssen & Bernhard Schwetzler

Please follow this link: Cross-border buyout pricing

Abstract: Using a dataset of 1149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples narrows when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs.

In this second Perspectives Paper on ESG “A Framework to Assess ESG Value Creation” IVSC analyses the impact of ESG on value creation and explore how such a framework may be incorporated into the capital allocation process.

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The Economist’s report How the pandemic changed the global economy analyses the impact of the Covid-19 pandemic on the global economy.

[Read more…] about How the pandemic changed the global economy

The monthly published Key Economic Data Report by Berkeley Research Group (BRG) reviews the key data of the US economy.

[Read more…] about Berkeley Research Group (BRG): Key Economic Data Report