Research

Working Papers

[1] Responding to Noise: Instrumenting Private Equity Ownership with Aneel Keswani, Per Strömberg, and Francisco Urzúa I.

Draft and information available upon request.

[2] The Consequences of Private Equity Investments for Industry Competition with Per Strömberg

Abstract: It has been documented that the competitiveness of industries has decreased over the past years. We ask whether private equity firms actively contribute to this reduction in competition through consolidation. It is not clear whether relation should be positive, since private equity firms may also increase competition through divestitures or by creating larger competitive players in industries in which only a few players are dominant. We find evidence that private equity investments is related to a marginal increase in consolidation, but that this increase is not resulting in higher mark-ups. We compare these results to the consolidation effects from acquisitions by non-PE-owned entities and find that the same does not hold, since these acquisitions do seem to increase mark-ups. The paper makes an novel contribution by exploring the dynamics between private equity investments and industry competitiveness.

Draft available upon request.

[3] How Does Private Equity Ownership Affect Acquisition Performance?

Abstract: I study whether private equity (PE) ownership affects the level of realized synergies in strategic acquisitions. The share of acquisitions conducted by PE-owned portfolio companies in the M&A market has more than doubled over the last fifteen years. I find that these acquisitions by PE-owned companies display higher growth synergies than acquisitions by non-PE owned companies. Evidence is consistent with the notion that PE ownership brings acquisition knowledge -- which transfers to the PE-owned company and is partially retained at the PE-owned company when the PE firm exits. These findings indicate that PE ownership is an alternative route for obtaining acquisition knowledge, which stimulates growth synergies.

[4] Private Equity as Strategic Buyers with Han T.J. Smit and Vadym Volosovych

Abstract: We provide evidence of changes in the private equity (PE) business model from the traditional PE engineering toward focus on growth using the buy-and-build strategies as a setting. In these strategies, a PE firm buys a company and builds on that "platform" through serial "add-on" acquisitions. Our novel decomposition methodology compares the combined entities instead of individual firms, and uses artificial replicating strategies as controls. While the traditional engineering practices remain important for growth and efficiency, we demonstrate a new channel of operational improvements, based on synergies between companies.

[5] A Platform Theory for Serial Acquisitions: Evidence from Private Equity with Han T.J. Smit

Abstract: We develop theory in which platform value is the driving motive for a serial acquisition strategy. The defining characteristic of the platform at the initiation of the strategy is that it generates future investment opportunities in a new market, sector or geography and thereby changes the strategic position of the investor. Following real options theory, the ability of the platform to yield anticipated growth option value from future deals depends on industry and company conditions. We use serial acquisition strategies in private equity to empirically test the platform explanation, since this setting excludes alternative explanations for serial deals. The empirical results support the theory that platform value is an important new explanation for serial acquisitions.

Work in progress

[6] The Effects of Private Equity Investments on Industries: An Instrumental Variable Approach

[7] Common Ownership and Spillovers in Private Equity Funds