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D4FT50

Sources of value creation in private equity buyouts of private firms

Cohn, J. B., Hotchkiss, E. S., & Towery, E. M. (2022)

Review of Finance, 26(2), 257-285

PE acquirers target private firms with weak profitability and firms with growth potential that are levered and finance-dependent. Targets grow rapidly after buyout, especially with add-on acquisitions; value comes from relaxing financing constraints and operating improvement, with a limited role for financial engineering. (US tax-return data per the paper as generally described; not stated in the abstract.)

Sourcedoi:10.1093/rof/rfac00578 citations (OpenAlex)

Full citation

Cohn, J. B., Hotchkiss, E. S., & Towery, E. M. (2022). Sources of value creation in private equity buyouts of private firms. Review of Finance, 26(2), 257-285.

https://doi.org/10.1093/rof/rfac005

This page describes a work published elsewhere. The summary, where present, states what the authors claim; it is not the school's position. Read the source before quoting a figure.