Irrevocable commitments, going private and private equity.

Wright, Mike; Weir, Charlie; Burrows, Andrew

Abstract

This paper adds to growing interest in public to private buy-outs and mechanisms to ensure bid success. Using a unique, hand-collected dataset of 155 public to private buy-outs we provide one of the first examinations of the determinants of irrevocable commitments. Irrevocable commitments involve undertakings given by existing shareholders to agree to sell their shares to the bidder before the bid to take the company private is announced. We find that, for management buy-outs, the level of irrevocable commitments is increased by the bid premium, the reputation of the private equity backer and board shareholdings. The level of irrevocable commitments is reduced by rumours of a takeover bid and bid value. We therefore find evidence that management and private equity firms' activity prior to the bid's announcement can have an important impact on the process of going private.

Citation

WRIGHT, M., WEIR, C. and BURROWS, A. 2007. Irrevocable commitments, going private and private equity. European financial management [online], 13(4), pages 757-775. Available from: https://doi.org/10.1111/j.1468-036X.2007.00382.x

• Journal Article Type: Article
• Acceptance Date: Aug 13, 2007
• Online Publication Date: Aug 13, 2007
• Publication Date: Sep 30, 2007
• Deposit Date: Oct 17, 2016
• Publicly Available Date: Oct 17, 2016
• Journal: European financial management
• Print ISSN: 1354-7798
• Electronic ISSN: 1468-036X
• Publisher: Wiley Open Access
• Peer Reviewed: Peer Reviewed
• Volume: 13
• Issue: 4
• Pages: 757-775
• DOI: https://doi.org/10.1111/j.1468-036X.2007.00382.x
• Keywords: Public to private buyouts; Irrevocable commitments; Takeovers
• Public URL: http://hdl.handle.net/10059/1900