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Private equity syndication: agency costs, reputation and collaboration

Miguel Meuleman (UGent) , Mike Wright (UGent) , Sophie Manigart (UGent) and Andy Locket
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Abstract
Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm.
Keywords
VENTURE CAPITAL INVESTMENTS, INITIAL PUBLIC OFFERINGS, MANAGEMENT BUYOUTS, INFORMATION PRODUCTION, OPERATING PERFORMANCE, GOVERNANCE, NETWORKS, HETEROGENEITY, ALLIANCES, CONTRACTS, private equity, syndication, agency theory, leveraged buyouts, venture capital

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Chicago
Meuleman, Miguel, Mike Wright, Sophie Manigart, and Andy Locket. 2009. “Private Equity Syndication: Agency Costs, Reputation and Collaboration.” Journal of Business, Finance & Accounting 36 (5-6): 616–644.
APA
Meuleman, M., Wright, M., Manigart, S., & Locket, A. (2009). Private equity syndication: agency costs, reputation and collaboration. JOURNAL OF BUSINESS, FINANCE & ACCOUNTING, 36(5-6), 616–644.
Vancouver
1.
Meuleman M, Wright M, Manigart S, Locket A. Private equity syndication: agency costs, reputation and collaboration. JOURNAL OF BUSINESS, FINANCE & ACCOUNTING. 2009;36(5-6):616–44.
MLA
Meuleman, Miguel, Mike Wright, Sophie Manigart, et al. “Private Equity Syndication: Agency Costs, Reputation and Collaboration.” JOURNAL OF BUSINESS, FINANCE & ACCOUNTING 36.5-6 (2009): 616–644. Print.
@article{2034035,
  abstract     = {Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm.},
  author       = {Meuleman, Miguel and Wright, Mike and Manigart, Sophie and Locket, Andy},
  issn         = {0306-686X},
  journal      = {JOURNAL OF BUSINESS, FINANCE \& ACCOUNTING},
  keyword      = {VENTURE CAPITAL INVESTMENTS,INITIAL PUBLIC OFFERINGS,MANAGEMENT BUYOUTS,INFORMATION PRODUCTION,OPERATING PERFORMANCE,GOVERNANCE,NETWORKS,HETEROGENEITY,ALLIANCES,CONTRACTS,private equity,syndication,agency theory,leveraged buyouts,venture capital},
  language     = {eng},
  number       = {5-6},
  pages        = {616--644},
  title        = {Private equity syndication: agency costs, reputation and collaboration},
  url          = {http://dx.doi.org/10.1111/j.1468-5957.2009.02124.x},
  volume       = {36},
  year         = {2009},
}

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