Sponsor Reputation and Capital Structure Dynamics in Leveraged Buyouts

• 成果类型: Article
• 署名作者: Shive, Sophie; Forster, Margaret
• 署名单位: University of Notre Dame
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.00971
• 发表日期: 2025
• 页码: 5849-5874
• 关键词: Leveraged buyout; borrower reputation; PRIVATE EQUITY

摘要

We examine whether leveraged buyout (LBO) sponsors' reputations as borrowers affect the refinancing terms of their portfolio companies. In 510 U.S. LBOs for which we can reconstruct debt financing activity, 67% of financing events occur one quarter before the earliest existing debt maturity. These On Time events generally improve borrowing terms, whereas Early events feature more dividends, leverage, and higher cost. In each case, dividend issuance decreases and cost increases with the proportion of the sponsors' recent exits that are failures. Effects are absent for matched firms and prior to the LBO and are procyclical; sponsors with recent failures miss opportunities to decrease financing costs in good times.