Value Creation By Private Equity Backed Ipos Underpricing And Long Term Performance In Germany PDF Download
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Author | : Matthias Hetzenecker |
Publisher | : GRIN Verlag |
Total Pages | : 76 |
Release | : 2020-11-19 |
Genre | : Business & Economics |
ISBN | : 3346299635 |
Download Value creation by private equity-backed IPOs. Underpricing and long-term performance in Germany Book in PDF, ePub and Kindle
Bachelor Thesis from the year 2019 in the subject Business economics - Review of Business Studies, grade: 1,0, University of applied Sciences Regensburg, language: English, abstract: This paper examines value creation by private equity-backed IPOs. It gives detailed insights on a mostly US-based research topic analyzing 134 German IPOs from 2002 to 2018, of which 49 were identified as PE-backed, and contributes empirical evidence on the discussion of private equity value creation. The empirical results provide detailed information on whether private equity financing can be a suitable financing source for companies by comparing and analyzing the performance differences between IPOs of companies with and without private equity sponsors. Furthermore, the paper provides empirical evidence on the IPO phenomena of underpricing and negative long-term performance for Germany, differentiating itself from former studies in terms of a broader time horizon and an extensive return calculation methodology. Since the locust swarms debate initiated by SPD politician Franz Müntefering, private equity investors have had to struggle with an extremely bad reputation in Germany. Unpopular measures such as company divestures or mass redundancies to achieve set turnover and return targets reinforce the negative image of financial investors. Accordingly, investor and business magnate Warren Buffet criticized that businesses under private equity control become a piece of merchandise. Nonetheless, the private equity industry continues to boom, reaching new records in terms of global business volume and transactions. Under these circumstances and new evolving discussions, it is essential to take a close look at the business model of private equity firms and to analyze potential short- and long-term value creation in their portfolio companies.
Author | : Christian von Drathen |
Publisher | : |
Total Pages | : 51 |
Release | : 2014 |
Genre | : |
ISBN | : |
Download The Performance of Private Equity-Backed Initial Public Offerings in Germany Book in PDF, ePub and Kindle
This paper investigates the long-term stock price performance of initial public offering (IPO) firms in Germany that were previously owned by private equity (PE) funds. A sample of 138 PE-backed IPOs (33 buyout- and 105 venture-backed) and 383 non-PE-backed IPOs between 1990 and 2007 is analysed for the long-term performance of these offerings. The analysis suggests that PE-backed IPOs outperform the stock market over the three-year term. On a risk-adjusted basis, returns are positive over a five-year post-IPO period. Within the PE-backed sample, venture capital-backed IPOs outperform buyout-backed offerings.
Author | : Justyna Dietrich |
Publisher | : diplom.de |
Total Pages | : 76 |
Release | : 2011-10-27 |
Genre | : Business & Economics |
ISBN | : 3842821727 |
Download IPO Underpricing in Germany - Empirical Analysis of Influencing Variables Book in PDF, ePub and Kindle
Inhaltsangabe:Introduction: Detected on the US market centuries ago, underpricing is the phenomenon of abnormal first-day returns from initial public offerings (IPOs). Without doubt, any US investor would agree, that one day-returns of 11.4% on average are exceptional and a worthwhile investment. Since then many studies have proven that it is a persistent phenomenon and also occurs on markets all over the world. The most puzzling question for scientists is why companies are leaving this money on the table and don t set an offering price that reflects the market demand at the offering date. Within that, researchers have also been trying to determine the factors that influence the severity of underpricing. Many different explanations with regard to the existence of underpricing have been derived thus far, with all claiming to be valid even if not exclusively. But despite this effort, research so far has not been able to create common sense. Some even argue that underpricing may not exist at all since most IPOs underperform severely in the long-run which leads some people to the conclusion that IPOs are in fact overpriced. The main focus of this paper is whether and how the findings of past research, primarily conducted for the US market, apply to the German IPO market. As a result, both investors and issuers shall receive practical implications for their decision-making within the IPO process. So far, profound underpricing research for the German market has been rather scarce. Most of the available literature concentrates either on dates before 1997 when most offering prices have been determined by using the fixed price mechanism whereas the most recent studies focus on the German stock exchange segment Neuer Markt exclusively. In contrast, this paper aims to give a more recent analysis of underpricing on the German market without distinguishing between different market segments. Additionally, a broad over-view and understanding of IPO underpricing, taking the long-run performance of IPOs into account, will be included. As a result, this paper is structured as follows: The second section consists of a description of some of the important theoretical aspects that have influence on the price setting of an IPO. It will concentrate on business valuation as it is the basis for setting the price of an IPO. Furthermore, the most common price setting mechanisms shall be explained. Additionally, the special role of the lead underwriter in the IPO [...]
Author | : Dustin Martin Brandt |
Publisher | : Igel |
Total Pages | : 130 |
Release | : 2019-12-16 |
Genre | : |
ISBN | : 9783954853694 |
Download Performance of Private Equity-Backed IPOs. Evidence from the UK After the Financial Crisis Book in PDF, ePub and Kindle
This study aims to analyse whether PE-backed IPOs in the UK in a post-financial crisis period retain to show first day underpricing, as it is true for average IPOs. However, more importantly is to find whether consisent with Johannson (2011), who found that European PE-backed IPOs have less underpricing, 4.67% compared to 16.40% in case of average IPOs, in paricular PE-backed IPOs in the UK show less underpricing than their non-backed counterparts. In the past, that is found true for PE-backed IPOs on the LSE between 1992 and 2005, and PE-backed IPOs on the LSE and the Alternative Investment Market (AIM) between 2011 and 2011. Hence, the first research question is: Do PE-backed IPOs in the UK show less underpricing on the initial day than non-sponsor backed IPOs in a post-financial crisis period? And secondly, do PE-backed IPOs in the UK in the long-run outperform non-sponsor backed IPOs in post-financial crisis period? One rationale is to examine whether equity markets experienced structural changes which might potentially affect the performance of PE-backed IPOs, which were deemed as such with superior returns. From a practical perspective, this study aims to make a contribution to investors who consider investing in equities in that sense, that it allows to better understand the aftermarket performance of PE-backed IPOs in the UK in a period after a major global financial crisis.
Author | : Thorsten Gröne |
Publisher | : ibidem-Verlag / ibidem Press |
Total Pages | : 174 |
Release | : 2012-02-13 |
Genre | : Business & Economics |
ISBN | : 3838256204 |
Download Private Equity in Germany Book in PDF, ePub and Kindle
This study evaluates the value generation potential of private equity for German mid-cap companies. A discussion of the private equity industry and the analysis of the value generation levers serve as a basis to further explore private equity value generation in the German market. First, the special features of German mid-cap companies are examined with a special focus on their financing needs. Second, the German private equity market is introduced and its differentiating features are revealed. The comparison of the findings assesses the general suitability of private equity as a financing option for German mid-cap companies and suggests that many mid-cap companies are not (yet) suited for private equity investments. Finally, the applicability of the identified value generation levers on the German mid-cap segment is analyzed with the help of a conceptual framework in order to evaluate the value generation potential. The results show that the traditional value generation levers are applicable but have to be adjusted with respect to national differences. Private equity associations have to specifically address the strong social considerations in the German business culture and the traditional unity of management, ownership, and supervision in the mid-cap segment in order to realize high rates of return. Anecdotal and recent empirical evidence indicates the relevance of many theoretical conclusions.
Author | : Matthias Meier |
Publisher | : |
Total Pages | : 31 |
Release | : 2010 |
Genre | : Going public (Securities) |
ISBN | : |
Download Underpricing and Performance of Private Equity Backed IPOs in Germany Book in PDF, ePub and Kindle
Author | : Roy van der Geest |
Publisher | : |
Total Pages | : 31 |
Release | : 2001 |
Genre | : |
ISBN | : |
Download Initial Returns and Long-Run Performance of Private Equity-Backed Initial Public Offerings on the Amsterdam Stock Exchange Book in PDF, ePub and Kindle
This paper investigates the initial returns and long run performance of initial public offerings (IPO) using a sample of 38 private equity-backed IPOs and 68 non-private equity-backed IPOs in the period 1985-1998 on the Amsterdam Stock Exchange. We find that private equity-backed firms outperform non-private equity-backed firms. In tests using several comparable benchmarks, private equity-backed firms show less underpricing than non-private equity-backed firms, however the difference is not significant. The evidence suggests that private equity-backed IPOs do not significantly underperform over a three-year period, while non-private equity-backed IPOs do. This paper also provides initial evidence on the sources of underpricing and underperformance. Evidence is presented that the reputation of the lead manager and the age of the firm have a negative effect on the level of underpricing and that the sales growth rate has a significant positive effect on the long-run performance of IPOs.
Author | : Oliver Reiche |
Publisher | : Anchor Academic Publishing (aap_verlag) |
Total Pages | : 105 |
Release | : 2014-06-23 |
Genre | : Business & Economics |
ISBN | : 3954892952 |
Download The Phenomenon of IPO Underpricing in the European and U.S. Stock Markets Book in PDF, ePub and Kindle
The Initial Public Offering (IPO) marks one of the most important events of a company. Basically, the aim is to generate maximum proceeds by selling the company’s shares to investors. However, the shares that are sold seem to be underpriced as the price significantly soars on the first trading day. Since the very first detection of this phenomenon in the United States in 1969, several subsequent studies have documented the existence of worldwide IPO underpricing. This study focuses on IPO Underpricing in the European and United States Stock Markets by outlining and discussing the following essential issues: What is underpricing in the context of the IPO? Which motivations are there and how do they impact? Is there IPO underpricing in the markets of Europe and the United States of America?
Author | : Florian Hotz |
Publisher | : |
Total Pages | : |
Release | : 2019 |
Genre | : |
ISBN | : |
Download The Long-Term Performance of Private Equity-Backed IPOs in Europe Between 1996 and 2015 Book in PDF, ePub and Kindle
This thesis examines the long-term share performance of private equity-backed initial public offerings in Europe between 1996 and 2015 and compares it to the market portfolio and non-backed going publics over the same period. Generally, the private equity-backed IPOs showed significant positive buy-and-hold abnormal returns three years after going public. However, the cumulative average abnormal returns did not yield a significant outperformance over the same three-year period. Furthermore, the significant positive abnormal returns on the first trading day support previous research findings on the underpricing of IPOs.
Author | : Marius Hamer |
Publisher | : GRIN Verlag |
Total Pages | : 72 |
Release | : 2007-06-20 |
Genre | : Business & Economics |
ISBN | : 3638733432 |
Download Empirical Evidence on IPO-Underpricing Book in PDF, ePub and Kindle
Diploma Thesis from the year 2007 in the subject Business economics - Investment and Finance, grade: 1,3, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, language: English, abstract: This paper aims at establishing a link between the average level of initial return of IPO shares, existing underpricing explanations and the dot-com bubble. In years prior to the boom of the new economy, underpricing was explained by various theories, which have extensively been developed since decades. However, in the years 1998 to 2001 IPOs were overly underpriced, leading to assumptions about behavioural aspects and investor irrationality. Analysing a comprehensive dataset of 371 IPOs on the Frankfurter Börse between 1997 and 2007, this paper aims at providing evidence that the observed lower levels of initial returns in recent years can indeed be aligned with existing theories on the basis of rational behaviour of market participants. Firstly, the IPO process and its major participants will be presented followed by a review of relevant studies on the IPO phenomenon. In the next step, established underpricing theories are recapitulated. A descriptive analysis of the data sample points out the particularities concerning the company and transaction characteristics of the sample firms. In a last step, a regression analysis relates various proxies for information asymmetry to established underpricing theories. It gives reason to believe that the irrationality at the turn of the century has vanished and that underpricing can again be explained by established theories.