Off-campus UNL users: To download campus access dissertations, please use the following link to log into our proxy server with your NU ID and password. When you are done browsing please remember to return to this page and log out.
Non-UNL users: Please talk to your librarian about requesting this dissertation through interlibrary loan.
An investigation of the strategic use of leveraged management buyouts
Abstract
This research examined the differing strategic uses of leveraged management buyouts at the corporate and enterprise levels of strategic decision making. The study comparatively investigated the use of leveraged management buyouts as divestitures at the corporate level, and as takeover defenses and investments at the enterprise level. These strategic uses were compared by industry membership, purchase prices, risk positions, and trends in these characteristics. In addition, the study tested the free cash flow theory of changes in corporate control as predicted in leveraged management buyouts. The research project tested the hypothesis that firms which implement leveraged management buyouts had higher free cash flows prior to the transaction than firms which did not change from public ownership. A paired sample was constructed on Standard Industrial Classification (SIC) code, time frame, and size. There was no difference in liquidity proxies of free cash flow between the two groups of firms. The results show that debt and liquidity positions of the firms are similar and that leveraged management buyouts are more a function of the goals of the decision makers. This study examined a total of seventy-five large leveraged management buyouts (purchase price over $75 million) in which all of the publicly owned shares were purchased and newly private firms were established. The strategic uses of these LBOs were classified by type: corporate divesture of a division or business unit, defense of the entire corporation against hostile takeover attempts by corporate raiders or another corporation, or purchase of the entire firm by management and other investors. The divestitures were analyzed with respect to the current movement toward restructuring corporations. The defenses and investment at the enterprise level were analyzed according to the market for corporate control and the concurrent market for undervalued corporate assets. These three types of LBOs were compared, and the results showed great similarity within industries, as well as with regard to measures such as ratios of price to sales and price to operating profits. The research results demonstrate that there is little evidence that leveraged management buyouts are increasing the risks at the enterprise level of strategic decision making which employs these strategies. The leveraged management buyouts peaked in 1984; managers are using LBOs more selectively and the use of LBOs is not increasing.
Subject Area
Management
Recommended Citation
Hall, Phillip Dean, "An investigation of the strategic use of leveraged management buyouts" (1988). ETD collection for University of Nebraska-Lincoln. AAI8818624.
https://digitalcommons.unl.edu/dissertations/AAI8818624