Do Publicly Listed Private Equity Firms Make Bad Deals?

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Private equity (PE) firms, investors, and regulators, are showing increasing interest in permanent PE capital raised on public markets. Also, a number of traditional PE partnership firms have recently sought listings on public stock exchanges. However concerns have been expressed that both of these developments weaken the incentives for private equity firms to make good deals and make them work. In this study, we construct a comprehensive dataset of buyout deals for public and private PE firms using CapitalIQ. We find little evidence that deals by unlisted PE partnerships perform better than deals by public permanent PE. However, buyout deals by listed traditional PE partnerships outperform those of unlisted traditional PE partnership firms, and of listed permanent PE firms.

Author(s):

Maurice McCourt    
ESSEC Busines School
France