Public-to-Private Transactions: LBOs, MBOs, MBIs and IBOs

This paper shows that a vibrant and economically important public-to-private market has reemerged in the US, UK and Continental Europe, since the second half of the 1990s. The paper shows recent trends and investigates the motives for public-to-private and LBO transactions. The reasons for the potential sources of shareholder wealth effects during the transaction period are examined: a distinction is made between tax benefits, incentive realignment, transaction costs savings, stakeholder expropriation, takeover defenses and corporate undervaluation. The paper also attempts to relate these value drivers to the post-transaction value and to the duration of the private status. Finally, the paper draws some conclusions about whether or not public-to-private transactions are useful devices for corporate restructuring.