SSRN-Do Buyouts (Still) Create Value? by Shourun Guo, Edith Hotchkiss, Weihong Song:
"For a sample of 176 buyouts completed between 1990 and 2006, we show that these deals are somewhat more conservatively priced and lower levered than their predecessors from the 1980s, but that the deals still impose substantial default risk on the firms. For 89 of these LBOs with post-buyout data available, we find that gains in operating performance are either comparable to or exceed those observed for benchmark firms matched on industry and pre-buyout characteristics....Returns to either pre- or post-buyout capital invested are significantly positive for the sample overall, and are positive for all outcome groups except those ending in a distressed restructuring. Returns to post-buyout capital are greater when the deal is financed with a greater proportion of bank financing, or when there is more than one private equity sponsor involved in the deal, consistent with increased monitoring by these providers of capital."