Drivers of LBO operating performance: An empirical investigation in Asia

Abstract

We extend our worldwide research on private equity by studying the drivers of LBO operating performance in Asia. We consider a large set of candidate drivers (financial, governance, macroeconomic, cultural, microeconomics and industry variables) and study their effects on performance over the short- and long-terms. To conduct our study, we use Capital IQ as a data base as well as a hand collected dataset covering LBOs in Asia. We contribute to the current literature by doing an investigation of the impact of macroeconomic factors on the performance of LBOs in Asia. We use a sample of 156 LBO transactions which occurred between 2000 and 2010. Our results show that GDP growth, industry growth, and market return are important drivers that significantly contribute to create value in LBOs.