This paper examines whether reverse leveraged buyouts, companies taken public after private equity ownership, actually deliver strong post IPO performance. Using 496 RLBOs from 1980 to 2002, the authors challenge concerns around quick exits and heavy leverage, finding results that were often stronger than many investors expected.
The Performance of Reverse Leveraged Buyouts
Josh Lerner, Jerry Cao
Research
43 Pages
Key Takeaways
RLBO Outperformance Evidence: RLBOs outperformed both traditional IPOs and market benchmarks across a sample of 496 deals between 1980 and 2002, generating economically meaningful excess returns.
Private Equity Matters: Buyout sponsors managed an average of $2.9 billion before RLBO exits, and larger firms backed by bigger managers generally produced stronger post IPO performance.
Quick Flips Lagged: RLBOs sold within 12 months of acquisition underperformed longer held deals, with three year S&P 500 adjusted returns of -4.69% versus 23.65% for longer holding periods.
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