going private, private equity, valuation
Undervaluation is often offered as an important consideration in private equity transactions. This study analyzes the importance of undervaluation, vis-à-vis information asymmetry, as a determining factor in ‘going-private’ transactions in Australia. Using a matched sample of firms from 1990 to 2012, we test a predictive choice model. The empirical results show that market undervaluation is a dominant factor in private equity takeovers. These results are robust to alternative measures of valuation, prevailing market conditions, money flows and subperiods.
Pilon School of Business
Australian Journal of Management
© Subhrendu Rath, Mamunur Rashid
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Original Publication Citation
Rath, S. & Rashid, M. (2016). Undervaluation and private equity takeovers. Australian Journal of Management, 41(4), 735-759. doi: 10.1177/0312896215594465
Rath, Subhrendu and Rashid, Mamunur, "Undervaluation and Private Equity Takeovers" (2015). Publications and Scholarship. 20.