Lenz Post-LBO development

Analysis of Changes in Strategy, Operations, and Performance after the Exit from Leveraged Buyouts in Germany
2010
ISBN: 978-3-8349-8600-9
Verlag: Betriebswirtschaftlicher Verlag Gabler
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 530 Seiten, eBook

Reihe: Entrepreneurial and Financial Studies

Richard K. Lenz analyses how LBOs evolve after the financial investors have exited. Based on three case studies of former LBOs in Germany, he shows that performance decline is often related to the weakening of the former performance-enhancing series of governance instruments.

Dr. Richard K. Lenz completed his doctoral thesis at the Center for Entrepreneurial and Financial Studies at the Technical University Munich.

Zielgruppe

Research

Autoren/Hrsg.

Lenz, Richard K.

Inhaltsverzeichnis

1;Foreword;6
2;Acknowledgements;8
3;Table of Contents;10
4;Index of Figures;16
5;Index of Tables;17
6;Index of Abbreviations;20
7;A Introduction and Founding Theory;22
7.1;1 Introduction and Overview;22
7.1.1;1.1 Relevance of Thesis;22
7.1.2;1.2 Research Objectives;24
7.1.3;1.3 Research Approach;28
7.1.4;1.4 Structure of Analysis;30
7.2;2 Definition and Context;32
7.2.1;2.1 Buyouts: a Definition;32
7.2.2;2.2 Characteristics of Buyouts;35
7.2.2.1;2.2.1 Industry-Specific Characteristics;36
7.2.2.2;2.2.2 Company-Specific Characteristics;39
7.2.2.3;2.2.3 Longevity of Buyouts and their Exit;41
7.2.3;2.3 Institutional Governance Framework;46
7.2.3.1;2.3.1 Buyout Investors;47
7.2.3.2;2.3.2 Stock Market;49
7.2.3.3;2.3.3 Strategic Owner;52
7.3;3 Related Theory to the Buyout Cycle;53
7.3.1;3.1 Introduction;54
7.3.2;3.2 Agency Theory;57
7.3.2.1;3.2.1 Agency Costs of Equity and Debt;59
7.3.2.2;3.2.2 Agency Costs of Free Cash Flow;61
7.3.2.3;3.2.3 Agency Costs during the Buyout;62
7.3.2.4;3.2.4 Agency Costs in the Post-Exit Period;65
7.3.3;3.3 Resource-Based View;69
7.3.3.1;3.3.1 Overview Resource Base;70
7.3.3.2;3.3.2 Categories of Resources and Capabilities;72
7.3.4;3.4 Corporate Governance-Related Perspective;75
7.3.4.1;3.4.1 Stakeholders in General and their Claims;76
7.3.4.2;3.4.2 Large Investors;77
7.3.5;3.5 Active Ownership and the Governed Corporation;81
8;B Model Building and Hypotheses Development;86
8.1;1 Introduction to the Basic Model;86
8.2;2 Post-Exit Changes in the Governance Structure and Managerial Objectives;89
8.2.1;2.1 Changes in Governance Structure at the Exit;90
8.2.1.1;2.1.1 Debt Leverage over the Buyout Cycle;90
8.2.1.2;2.1.2 Ownership Structure and Performance;100
8.2.1.3;2.1.3 Owner Identity and Activity Level of Investors;107
8.2.1.4;2.1.4 Change of Management Shareholdings;115
8.2.1.5;2.1.5 Concluding Remarks;119
8.2.2;2.2 Changes in Motives and Potential Wealth Transfer;120
8.2.2.1;2.2.1 Buyout Investors;122
8.2.2.2;2.2.2 Post-Exit Shareholders;124
8.2.2.3;2.2.3 Management;125
8.2.2.4;2.2.4 Employees;127
8.2.2.5;2.2.5 Debt Holders;128
8.2.3;2.3 Changes in Management Objectives at the Exit;129
8.2.3.1;2.3.1 Emphasis on Efficiency by Management;130
8.2.3.2;2.3.2 Emphasis on Corporate Entrepreneurship by Management;132
8.3;3 Post-Exit Changes in Efficiency-Focused Management Activities;135
8.3.1;3.1 Introductory Remarks;135
8.3.2;3.2 Changes in Operations and Manufacturing;136
8.3.2.1;3.2.1 Operational Productivity and Employment;137
8.3.2.2;3.2.2 Asset Productivity and Capital Expenditure;145
8.3.2.3;3.2.3 Outsourcing, Offshoring and Partnering;150
8.3.2.4;3.2.4 Working Capital Management;154
8.3.3;3.3 Changes in Administration and Organization;157
8.3.3.1;3.3.1 Overhead Productivity;158
8.3.3.2;3.3.2 Hierarchical Complexity and Decision-Making;162
8.3.3.3;3.3.3 Efficiency of Management Control Systems;166
8.4;4 Post-Exit Changes in Entrepreneurial Growth Focused- Management Activities;171
8.4.1;4.1 Introductory Remarks;171
8.4.2;4.2 Changes in Strategy;177
8.4.2.1;4.2.1 Strategic Positioning;178
8.4.2.2;4.2.2 Diversification and Scope;192
8.4.3;4.3 Changes in Innovation;199
8.4.3.1;4.3.1 R&D Spending and Efficiency;200
8.4.3.2;4.3.2 R&D Focus and Cooperation;210
8.4.4;4.4 Change in Market Development;212
8.4.5;4.5 Change in Human Resource Management;219
8.4.5.1;4.5.1 Human Resources;220
8.4.5.2;4.5.2 Top Management Resources;224
8.4.5.2.1;4.5.2.1 Quality and Composition of Team;224
8.4.5.2.2;4.5.2.2 Incentive System and Compensation;230
8.5;5 Performance Development during the Buyout Cycle;236
8.5.1;5.1 Introductory Remarks;236
8.5.2;5.2 Performance Development during Buyout Restructuring;236
8.5.3;5.3 Post-Exit Performance Development;248
8.5.3.1;5.3.1 Exit Market Development in Germany;248
8.5.3.2;5.3.2 Determining Concerns for the Choice of Exit Channel;252
8.5.3.3;5.3.3 Costs and Benefits;256
8.5.3.4;5.3.4 Performance Development of a LBO exiting via Going-Public;258
8.5.3.4.1;5.3.4.1 General Empirical Evidence Related to a Going-Public;258
8.5.3.4.2;5.3.4.2 Changes in Corporate Governance and Performance at Going-Public;264
8.5.3.4.3;5.3.4.3 Performance of LBOs Going Public;267
8.5.3.5;5.3.5 Performance Development of a Buyout Exiting via Trade Sale;272
8.5.3.5.1;5.3.5.1 General Empirical Evidence related to a Trade Sale;272
8.5.3.5.2;5.3.5.2 Changes in Corporate Governance and Performance after a Trade Sale;276
9;C Empirical Part;280
9.1;1 Research Methodology;280
9.1.1;1.1 Identification of Case Studies;280
9.1.2;1.2 Measures for Analyses;282
9.1.2.1;1.2.1 Measures for Corporate Governance;282
9.1.2.2;1.2.2 Measures for Management Objectives;283
9.1.2.3;1.2.3 Measures for Value Creation Levers;284
9.1.2.4;1.2.4 Measures for Performance Development;288
9.1.3;1.3 Data Collection;290
9.2;2 Case Study: Wincor Nixdorf;292
9.2.1;2.1 Case Description;292
9.2.1.1;2.1.1 Company Development before the Buyout;292
9.2.1.2;2.1.2 Company Development during the Buyout Period;294
9.2.1.2.1;2.1.2.1 Efficiency-Focused Management Activities;294
9.2.1.2.2;2.1.2.2 Entrepreneurial Growth-Focused Management Activities;296
9.2.1.3;2.1.3 Company Development fter The Exit;298
9.2.1.3.1;2.1.3.1 Market nd Competitive Environment;298
9.2.1.3.2;2.1.3.2 Efficiency-Focused Management Activities;299
9.2.1.3.3;2.1.3.3 Entrepreneurial Growth Focused-Management Activities;306
9.2.2;2.2 Case Analysis;318
9.2.2.1;2.2.1 Changes in Governance over the Buyout Cycle and in the Post-Exit Period;318
9.2.2.1.1;2.2.1.1 Debt Leverage;318
9.2.2.1.2;2.2.1.2 Ownership Concentration;320
9.2.2.1.3;2.2.1.3 Activity Level of Investors;322
9.2.2.1.4;2.2.1.4 Managerial Shareholdings;326
9.2.2.2;2.2.2 Changes in Management Objectives;329
9.2.2.3;2.2.3 Changes in Efficiency-Focused Management Activities;331
9.2.2.4;2.2.4 Changes in Entrepreneurship-Focused Management Activities;335
9.2.2.5;2.2.5 Changes in Performance Development;339
9.3;3 Case Study: Techem;345
9.3.1;3.1 Case Description;345
9.3.1.1;3.1.1 Company Development before the Buyout;345
9.3.1.2;3.1.2 Company Development during Buyout;346
9.3.1.2.1;3.1.2.1 Efficiency-Focused Management Activities;346
9.3.1.2.2;3.1.2.2 Entrepreneurial Growth-Focused Management Activities;348
9.3.1.3;3.1.3 Company Development after the Exit;351
9.3.1.3.1;3.1.3.1 Market and Competitive Environment;351
9.3.1.3.2;3.1.3.2 Efficiency-Focused Management Activities;352
9.3.1.3.3;3.1.3.3 Entrepreneurial Growth Focused-Management Activities;357
9.3.2;3.2 Case Analysis;372
9.3.2.1;3.2.1 Changes in Governance over the Buyout Cycle and in the Post-Exit Period;372
9.3.2.1.1;3.2.1.1 Debt Leverage;372
9.3.2.1.2;3.2.1.2 Ownership Concentration;374
9.3.2.1.3;3.2.1.3 Activity Level of Investors;378
9.3.2.1.4;3.2.1.4 Managerial Shareholdings;380
9.3.2.2;3.2.2 Changes in Management Objectives;383
9.3.2.3;3.2.3 Changes in Efficiency-Focused Management Activities;385
9.3.2.4;3.2.4 Changes in Entrepreneurship-Focused Management Activities;388
9.3.2.5;3.2.5 Changes in Performance Development;393
9.4;4 Case Study: Trevira;400
9.4.1;4.1 Case Description;400
9.4.1.1;4.1.1 Company Development before the Buyout;400
9.4.1.2;4.1.2 Company Development during the Buyout Period;402
9.4.1.2.1;4.1.2.1 Efficiency-Focused Management Activities;402
9.4.1.2.2;4.1.2.2 Entrepreneurial Growth-Focused Management Activities;404
9.4.1.3;4.1.3 Company Development after the Exit;407
9.4.1.3.1;4.1.3.1 Market and Competitive Environment;409
9.4.1.3.2;4.1.3.2 Efficiency-Focused Management Activities;409
9.4.1.3.3;4.1.3.3 Entrepreneurial Growth Focused-Management Activities;416
9.4.2;4.2 Case Analysis;422
9.4.2.1;4.2.1 Changes in Governance over the Buyout Cycle and in the Post-Exit Period;422
9.4.2.1.1;4.2.1.1 Debt Leverage;423
9.4.2.1.2;4.2.1.2 Ownership Concentration;425
9.4.2.1.3;4.2.1.3 Activity Level of Investors;426
9.4.2.1.4;4.2.1.4 Managerial Shareholdings;428
9.4.2.2;4.2.2 Changes in Management Objectives;431
9.4.2.3;4.2.3 Changes in Efficiency-Focused Management Activities;432
9.4.2.4;4.2.4 Changes in Entrepreneurship-Focused Management Activities;437
9.4.2.5;4.2.5 Changes in Performance Development;442
9.5;5 Comparative Case Study Analysis;448
9.5.1;5.1 Changes in Governance Structure;448
9.5.1.1;5.1.1 Debt Leverage;448
9.5.1.2;5.1.2 Ownership Concentration;449
9.5.1.3;5.1.3 Activity Level of Investors;450
9.5.1.4;5.1.4 Managerial Shareholdings;452
9.5.2;5.2 Changes in Management Objectives;454
9.5.3;5.3 Changes in Efficiency-Focused Management;457
9.5.4;5.4 Changes in Entrepreneurial Growth-Focused Management;466
9.5.5;5.5 Changes in Performance Development;479
9.5.5.1;5.5.1 During the LBO;479
9.5.5.2;5.5.2 Post-LBO;480
9.5.5.2.1;5.5.2.1 Revenue Growth;480
9.5.5.2.2;5.5.2.2 Margin Development;481
9.5.5.2.3;5.5.2.3 Cash Flow from Operations;484
9.5.5.2.4;5.5.2.4 Cash Flow from Investments and Resulting Free Cash Flow;487
9.5.6;5.6 Discussion;488
9.5.7;5.7 Closing Remarks;493
10;D Synthesis and Outlook;495
10.1;1 Research Synthesis and Conclusion;495
10.2;2 Contributions to Research and to Practice;502
10.2.1;2.1 Contributions to Agency Theory;502
10.2.2;2.2 Contributions to Corporate Governance Theory;504
10.2.3;2.3 Contributions to Operations Management, Strategy, and Corporate Entrepreneurship Research;507
10.2.4;2.4 Contributions to Finance Research;509
10.2.5;2.5 Applications of Findings to Post-Ext Shareholders and Investors;513
10.3;3 Limitations of Study and Areas of Future Research;517
11;E Appendix;520
11.1;1 Interview Partners;520
11.2;2 Key Financials of Case Studies;521
12;F References;524

and Founding Theory.- Model Building and Hypotheses Development.- Empirical Part.- Synthesis and Outlook.

Über Autor(innen)

Dr. Richard K. Lenz completed his doctoral thesis at the Center for Entrepreneurial and Financial Studies at the Technical University Munich.