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Corporate Governance and Value Creation - Evidence From Private Equity 2-June-2008 - McKinsey and London Business School

Corporate Governance and Value Creation - Evidence From Private Equity 2-June-2008 - McKinsey and London Business School

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Published by AsiaBuyouts
Corporate Governance and Value Creation: Evidence From Private Equity presentation dated 2-June-2008 by McKinsey and London Business School at the Private Equity Symposium.

For an article discussing this document and/or more private equity info, please visit: http://www.asiabuyouts.com

Source: http://www.permira.com/cms3/assets/Download/13
Corporate Governance and Value Creation: Evidence From Private Equity presentation dated 2-June-2008 by McKinsey and London Business School at the Private Equity Symposium.

For an article discussing this document and/or more private equity info, please visit: http://www.asiabuyouts.com

Source: http://www.permira.com/cms3/assets/Download/13

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Categories:Business/Law, Finance
Published by: AsiaBuyouts on Aug 31, 2009
Copyright:Attribution Non-commercial

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05/11/2014

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Corporate Governance and Value Creation:Evidence from Private Equity-Viral V. Acharya and Conor Kehoe
Presentation at PE Symposium, London Business School2 June 2008
 
1
Introduction
 
2
Existing evidence
1.Jensen (1989) in his seminal piece “The Eclipse of the Public Corporation”argued thatbuyouts create value through high leverage and powerful incentives2.Kaplan and Schoar (2005) study
net 
IRRsof 746 funds during 1985-2001-Median = 80% of S&P500, Mean = 90-95%; Confirmed by studies in Europe3.Evidence is however rather rosy for the mature (>= 5 years) and largest houses-Kaplan and Schoar (2005)-Median = 150% of S&P500, Mean = 160-180%-Performance is persistent across funds of these houses-Cao and Lerner (2006) study buyouts that exit during 1980-2002-Out-performance adjusted for risk by about 0.5% per month inthe five years after exit, especially if PE involvement >= 1 year4.Active Ownership”study by McKinsey & Co.-Showed out-performance relative to quoted peers-Out-performance correlated with PE firm engagement and governance

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