Private Equity and Insolvency compares the failure rates of 140,000 private equity-backed and non-private equity backed businesses between 1995 and 2009.
The results show that buy-outs are more prone to failure than other types of companies, but that the risk of failure is significantly reduced if private equity companies are involved.
The research was carried out by the Centre for Management Buyout Research at Nottingham University Business School, the Credit Management Research Centre at Leeds University Business School, and The Entrepreneurship and Innovation Centre University of Birmingham Business School, and was commissioned by the British Private Equity and Venture Capital Association (BVCA).
Other key findings of the report include:• Private equity involvement significantly reduces the risk of buyout failure;
“These are important findings in the context of the current policy debates surrounding private equity ownership,” said Professor Mike Wright of Nottingham University Business School.
“Our finding on the impact of leverage is counter to popular perceptions about private equity ownership. Private equity firms seem to select the best opportunities from the buyout population in terms of the company's prospective profitability and ability to cover interest and, where problems emerge, private equity firms appear to be more effective at structuring solutions to debt problems.”
Nick Wilson, Professor of Credit Management at Leeds University Business School, said: “This study analysed the insolvency rates of the UK corporate sector up to and including the recession and the peak of corporate insolvencies. We find that private equity-backed buyouts do not have a higher failure rate than other companies and, indeed, show a lower incidence of financial distress than other types of company buy-outs.
“Although leveraged, private equity-backed buyouts generate sufficient cash to cover interest payments and show adequate coverage ratios. Moreover, there is evidence that stakeholders in private equity backed deals are proactive in helping their portfolio companies deal better and more timely with trading and/or financing difficulties, particularly in the more recent period leading up to the credit crunch.”
Emma Thorne | EurekAlert!
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik
The world's highest gain high power laser amplifier - by many orders of magnitude - has been developed in research led at the University of Strathclyde.
The researchers demonstrated the feasibility of using plasma to amplify short laser pulses of picojoule-level energy up to 100 millijoules, which is a 'gain'...
Staphylococcus aureus is a feared pathogen (MRSA, multi-resistant S. aureus) due to frequent resistances against many antibiotics, especially in hospital infections. Researchers at the Paul-Ehrlich-Institut have identified immunological processes that prevent a successful immune response directed against the pathogenic agent. The delivery of bacterial proteins with RNA adjuvant or messenger RNA (mRNA) into immune cells allows the re-direction of the immune response towards an active defense against S. aureus. This could be of significant importance for the development of an effective vaccine. PLOS Pathogens has published these research results online on 25 May 2017.
Staphylococcus aureus (S. aureus) is a bacterium that colonizes by far more than half of the skin and the mucosa of adults, usually without causing infections....
Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.
The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....
An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.
We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...
Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.
Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...
24.05.2017 | Event News
23.05.2017 | Event News
22.05.2017 | Event News
29.05.2017 | Earth Sciences
29.05.2017 | Life Sciences
29.05.2017 | Physics and Astronomy