Determinants of Public-to-Private Transactions. Evidence from the London Stock Exchange

Table of Contents

INTRODUCTION

CHAPTER 1. THEORETICAL BACKGROUND

1.1. Public-to-Private Transactions: Literature Review

1.2. Determinants of Public-to-Private Transactions: Classification

1.3. Case Studies: Buyouts of Alliance Boots and Regent Inns

1.4. Hypotheses Formulation

CHAPTER 2. EMPIRICAL STUDY

2.1. Research Design

2.2. Sampling and Data Collection

2.3. Empirical Results & Discussion

CONCLUSIONS

LIST OF REFERENCES

Research Goal and Main Themes

The primary research goal of this thesis is to examine the determinants of public-to-private transactions for firms listed on the London Stock Exchange, specifically focusing on the relationship between analyst following, insider ownership, and the probability of a company being taken private by institutional investors or management.

• Determinants of public-to-private (PTP) transactions in the UK market.
• The "financial visibility" hypothesis regarding analyst coverage and delisting probability.
• The influence of insider ownership (executive board holdings) on buyout likelihood.
• Application of survival models (Cox proportional hazard model) to analyze corporate control changes.
• Comparative analysis of institutional vs. management buyouts and their impact on firm structure.

Excerpt from the Book

Summary of Chapters

INTRODUCTION: Presents the motivation for studying public-to-private transactions, defines the scope of the study (IBO, MBO, MBI), and outlines the research objectives.

CHAPTER 1. THEORETICAL BACKGROUND: Reviews existing literature on costs and benefits of public status, introduces theoretical classifications of determinants, analyzes specific case studies, and formulates testable hypotheses.

CHAPTER 2. EMPIRICAL STUDY: Describes the research design using the Cox proportional hazard model, details the sample selection and data collection process, and presents the empirical findings regarding the factors influencing buyout probability.

CONCLUSIONS: Summarizes the key findings, confirms the negative relationship between analyst following/insider ownership and buyout probability, and discusses practical implications for investors and regulators.

Keywords

Public-to-private transactions, London Stock Exchange, Institutional buyout, Management buyout, Cox model, Analyst following, Insider ownership, Financial visibility, Agency costs, Corporate governance, Leverage, Market-to-book ratio, Survival analysis, UK listed firms.

Frequently Asked Questions

What is the core focus of this thesis?

The thesis investigates the determinants of companies abandoning their public status on the London Stock Exchange and being bought out, with a specific focus on the roles of analyst following and executive insider ownership.

What are the primary thematic areas covered?

The research covers agency costs, financial visibility, corporate ownership structures, and the probability of being targeted in institutional or management buyouts.

What is the main research question?

The central research question asks: "Which factors are related to the probability of a company being taken private?"

Which methodology is employed in the empirical research?

The study utilizes the Cox proportional hazard model to analyze the conditional probability of a firm being bought out over the period from 2003 to 2013.

What is examined in the main body of the work?

The work reviews theoretical literature on delisting, classifies the determinants of public-to-private transactions, presents case studies (Alliance Boots and Regent Inns), and conducts a quantitative analysis of a large sample of UK-listed firms.

Which keywords best describe this study?

Institutional buyout, Management buyout, Cox model, financial visibility, insider ownership, agency costs, and the London Stock Exchange.

How does "financial visibility" affect the likelihood of a buyout?

The study finds support for the financial visibility hypothesis: firms followed by a higher number of analysts are less likely to be bought out, as this monitoring reduces agency costs and information asymmetry.

What were the findings regarding insider ownership?

Contrary to some previous expectations, the empirical results show that firms with higher insider ownership (defined as shares held by executive directors) are less likely to be bought out, possibly because these managers are better able to block buyouts they view as contrary to their interests.