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Cross-sectional analysis of the pricing of private equity placements.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Cross-sectional analysis of the pricing of private equity placements./
Author:	Logan, Twila Mae.
Description:	1 online resource (119 pages)
Notes:	Source: Dissertations Abstracts International, Volume: 57-01, Section: A.
Contained By:	Dissertations Abstracts International57-01A.
Subject:	Finance. -
Online resource:	click for full text (PQDT)
ISBN:	9798209476689

Cross-sectional analysis of the pricing of private equity placements.
Logan, Twila Mae.

Cross-sectional analysis of the pricing of private equity placements. - 1 online resource (119 pages)

Source: Dissertations Abstracts International, Volume: 57-01, Section: A.

Thesis (Ph.D.)--The Ohio State University, 1995.

Includes bibliographical references

This study examines the pricing of private equity placements and the reasons for interfirm private equity sales. The study provides answers to the following questions: (1) Is the price related to the identity of the purchaser, (2) Is there any relationship between the reasons for issuing private equity, the price of the equity and the general characteristics of the private equity? Four possible reasons for interfirm equity sales are examined: (1) To reduce contracting costs of a product market contract made between the buyer and the seller. This can be done either through (a) bonding mechanisms--selling non-tradable equity at a discount, or (b) control mechanisms--selling equity at a premium and putting control mechanisms in place (for example, election of directors). (2) To reduce information asymmetry--the buyer signals the quality of its assets by purchasing equity of the selling firm. (3) The buyer uses the private equity as an initial stake in prelude to a merger. (4) The selling firm places the private equity in friendly hands to thwart any possible takeover. Private equity sold to firm buyers are priced on average at a premium to market prices, and have more control mechanisms than private equity sold to other types of investors. Interfirm private equity sales are often accompanied by product market agreements, and the pricing and the use of different types of control mechanisms vary across different of product market contracts. There were small numbers of interfirm private equity used for prelude to a merger or for anti-takeover defenses. Of the two product market motivations, the evidence supports the reduction contracting costs over reduction in information asymmetries. The data in this study indicates that (i) interfirm equity sales are priced differently from sales to other types of buyers, and most are done as a part of a product market contract, (ii) the pricing and control mechanisms vary across product market types, that is, the reasons for issuing private equity affect the price and the general characteristics of the private equity sale.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2024

Mode of access: World Wide Web

ISBN: 9798209476689Subjects--Topical Terms:

559073
Finance.
Index Terms--Genre/Form:

554714
Electronic books.

Cross-sectional analysis of the pricing of private equity placements.
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504 $a Includes bibliographical references
520 $a This study examines the pricing of private equity placements and the reasons for interfirm private equity sales. The study provides answers to the following questions: (1) Is the price related to the identity of the purchaser, (2) Is there any relationship between the reasons for issuing private equity, the price of the equity and the general characteristics of the private equity? Four possible reasons for interfirm equity sales are examined: (1) To reduce contracting costs of a product market contract made between the buyer and the seller. This can be done either through (a) bonding mechanisms--selling non-tradable equity at a discount, or (b) control mechanisms--selling equity at a premium and putting control mechanisms in place (for example, election of directors). (2) To reduce information asymmetry--the buyer signals the quality of its assets by purchasing equity of the selling firm. (3) The buyer uses the private equity as an initial stake in prelude to a merger. (4) The selling firm places the private equity in friendly hands to thwart any possible takeover. Private equity sold to firm buyers are priced on average at a premium to market prices, and have more control mechanisms than private equity sold to other types of investors. Interfirm private equity sales are often accompanied by product market agreements, and the pricing and the use of different types of control mechanisms vary across different of product market contracts. There were small numbers of interfirm private equity used for prelude to a merger or for anti-takeover defenses. Of the two product market motivations, the evidence supports the reduction contracting costs over reduction in information asymmetries. The data in this study indicates that (i) interfirm equity sales are priced differently from sales to other types of buyers, and most are done as a part of a product market contract, (ii) the pricing and control mechanisms vary across product market types, that is, the reasons for issuing private equity affect the price and the general characteristics of the private equity sale.
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