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Fabio Bertoni, Anne-Laure Le Nadant and Frédéric Perdreau
''Innovation and R&D investments by leveraged buyout companies in times of crisis''
( 2014, Vol. 34 No.2 )
We study innovation and R&D investments made from 2008 to 2010 by UK companies that were the targets of leveraged buyout (LBO) in previous years. We find that overall, LBO companies do not exhibit lower innovation and R&D investments than non-LBO companies during the crisis, with other things being equal. However, innovation and R&D investments decline substantially in LBO companies that were financially constrained before the deal. We argue that in unfavorable market conditions, LBOs tend to exacerbate the issues related to investments in innovation in firms facing financial constraints.
Keywords: Leveraged Buyouts, Innovation, Research and Development, Economic Crisis, Private Equity, Financial Constraints
JEL: O3 - Technological Change; Research and Development: General
G3 - Corporate Finance and Governance: General
Manuscript Received : Feb 05 2014 Manuscript Accepted : Apr 23 2014

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