BradleyM., “Interfirm Tender Offers And The Market For Corporate Control,”Journal of Business (October 1980), pp. 345–376.
2.
JensenM., “The Takeover Controversy: Analysis and Evidence,” in CoffeeJ.C.Jr.LowensteinL.Rose-AckermanS., eds., Knights, Raiders & Targets: The Impact of the Hostile Takeover (New York, NY: Oxford University Press, 1988), pp. 314–354.
3.
KaplanS., “Management Buyouts: Efficiency Gains or Value Transfers?” mimeo, Center for Research on Security Prices, University of Chicago, October 1988.
4.
For evidence that there is competition in the market for corporate control and its implication for LBOs, see EasterwoodJ.SingerR.HsiehV., “The Motivations for Going Private,”mimeo, University of Houston, 1988. For a case study of this issue, see SaporitoB., “How Ross Johnson Blew the Buyout,”Fortune, April 24, 1989, pp. 296–316.
5.
See MaraisL.SchipperK.SmithA., “Wealth Effects of Going Private for Senior Securities,” mimeo, University of Chicago, 1988. They find no systematic evidence of transfers of wealth from bondholders and preferred stockholders.
6.
See Kaplan, op. cit., and MuscarellaC.VetsuypensM., “Efficiency and Organizational Structure: A Study of Reverse LBOs,” mimeo, Southern Methodist University, 1989. The evidence is less conclusive with regard to transfers from employees and communities in which firms are located. The difficulty in addressing this issue lies in objectively ascertaining whether layoffs and wage reductions are in the nature of “unfair” costs (because they were not built into the terms of their respective contracts with the firm). Deciding whether costs to these stakeholders are “unfair” is necessarily an issue of judgement. Even if these costs exist, the relevant public policy question is whether the possible efficiency gains to the firms outweigh the costs to employees and communities.
7.
CoaseR., “The Nature Of The Firm,”Economica, 4 (1937): 386–405; FamaE.JensenM., “Separation of Ownership and Control,”Journal of Law and Economics (June 1983), pp. 301–325.
8.
“The Battle For Corporate Control,”Business Week, May 18, 1987, p. 103.
9.
Stock participation in buyout companies offers a remarkable opportunity to amass wealth for the top management team. Besides current dividend income, large capital gains can be realized from the eventual return of the successfully restructured company or division to public ownership.
10.
“When Power Investors Call The Shots,”Business Week, June 20, 1988, p. 130.
11.
“White Shoes and Blue Collars at Morgan Stanley,”Business Week, June 20, 1988, p.122.
12.
“Buyout Kings,”Fortune, July 4, 1988, p. 57.
13.
“Power Investors,”Business Week, June 20, 1988, p. 117.
14.
“With Leveraged Buyouts in Spotlight, Here Are Answers To Common Questions,”Wall Street Journal, October 28, 1988.
15.
Jensen, op. cit.
16.
Business Week, op. cit., June 20, 1988, p.127.
17.
Jensen, op. cit., p. 323.
18.
“How Sweet It Is To Be Out From Under Beatrice's Thumb,”Business Week, May 9, 1988, p. 99.
19.
“Two Scholars Blast KKR Buyout Study That Reached Pro-Takeover Conclusions,”Wall Street Journal, May 10, 1989, p. 2.
20.
“Learning To Live With Leverage,”Business Week, November 7, 1988, p. 139.
21.
“Who Wins In The Hugest Deals?”Fortune, November 21, 1988, p. 92.
22.
“Some Lessons From 25 LBO's,”Presentation made at the 1989 International Petrochemical Conference, National Petroleum Refiners Association, April 2–4, 1989.
