Why Are Buyouts Levered? The Financial Structure of Private Equity Funds

• 成果类型: Article
• 署名作者: Axelson, Ulf; Stroemberg, Per; Weisbach, Michael S.
• 署名单位: Stockholm School of Economics; National Bureau of Economic Research; University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2009.01473.x
• 发表日期: 2009
• 页码: 1549-1582
• 关键词: limited-liability; AGENCY COSTS; partnership; COMPETITION; projects

摘要

Private equity funds are important to the economy, yet there is little analysis explaining their financial structure. In our model the financial structure minimizes agency conflicts between fund managers and investors. Relative to financing each deal separately, raising a fund where the manager receives a fraction of aggregate excess returns reduces incentives to make bad investments. Efficiency is further improved by requiring funds to also use deal-by-deal debt financing, which becomes unavailable in states where internal discipline fails. Private equity investment becomes highly sensitive to aggregate credit conditions and investments in bad states outperform investments in good states.