RESULTS

Background Analysis

This paper analyses all management buy–out and buy–in deals from 1989 to 1995 inclusive. According to statistics provided by the British Venture Capital Association (BVCA), in the period 1993–1995 buy–outs accounted for 49% and buy–ins for 19% of the total investments by venture capital firms in the UK. Table 2 shows the total number of such deals and separates them into those which were backed by venture capital firms and those which were not. As can be seen, there were 1,999 such deals backed by venture capital firms: just over 50% of the total, of which 1,344 were buy–outs and 655 buy–ins. It will be observed that it is much more likely that buy–ins will be venture capital backed than buy–outs.

Table 3 shows the number of venture capital backed management buy–out and buy–in deals which were supported by a single venture capital firm and those that were syndicated across more than one. In total 31% of these deals were syndicated (32% of buy–outs and 29% of buy–ins). As might be expected, a higher proportion of the larger deals are syndicated. For example, 66% of deals valued at œ10 million pounds or more are syndicated compared with 23% of those valued at less than œ10 million. Thus, syndication is an important aspect of the financing of management buy–outs and buy–ins.

Econometric Analysis

Table 4 reports the results of applying both the weighted analysis of the complete cases and the full data–set with imputed missing values. The first point to notice is that the signs on the coefficients are generally the same whether using the weighted complete case of imputed missing values and, in particular, that conclusion holds for all of the variables which are significant at the 10% or lower level. Since a substantial number of the explanatory variables are 0,1 dummies it would be expected that their coefficients would be different in size between the two models given the much greater number of cases in the latter.

** significant at the 5% level

*** significant at the 10% level