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Influence of factors on the activity of financial and strategic buyers in leveraged buyouts

Vol. 27, Iss. 4, APRIL 2021

Received: 1 March 2021

Received in revised form: 15 March 2021

Accepted: 29 March 2021

Available online: 29 April 2021

Subject Heading: INVESTING

JEL Classification: D22, G34

Pages: 913–933

https://doi.org/10.24891/fc.27.4.913

Il'ya A. BALAKIN Financial University under Government of Russian Federation Moscow, Russian Federation
ilya.balakin.96@bk.ru

https://orcid.org/0000-0002-8069-8167

Subject. This article examines the influence of factors on the activity of financial investors and strategic buyers in leveraged buyout transactions.
Objectives. The article aims to clarify the dependence of the behavior of financial investors and strategic buyers on changes in various market conditions.
Methods. For the study, I used a correlation analysis, logistic regression, comparison, and the abstract-logical and monographic methods.
Results. The article identifies and describes differences in the behavior of the main types of buyers of debt financing transactions. Based on an analysis of leveraged buyout transactions in the euro area between 2002 and 2020, the article assesses the dependence of the relative contribution of financial investors and strategic buyers to the overall flow of transactions on the terms of debt and equity markets. Transaction-level analysis shows that differences in the behavior of financial investors and strategic buyers are due to differences in their propensity to make transactions in different market conditions and differences in adjustments to the volume of transactions they make, but are independent of the takeover premium they pay.
Relevance. The results of the study contribute to a better understanding of the behavior of each type of buyout buyer, depending on changing market conditions.

Keywords: leveraged buyout, debt financing, financial investor, trade buyer

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