Cross-border buyout exit success

Abstract

This paper examines the importance of institutional contexts in cross-border buyout exit success. After tracking 2639 cross-border buyout investments during 1998–2007 in 38 countries and regions as of 2016, I find that the higher the institutional quality of the country where the portfolio company is located, the higher the probability of a successful exit via IPO or M&A. The larger the institutional distance between the portfolio company country and the private equity (PE) firm country, the lower the exit success, while PE firms' international experience, industrial experience, and reputation help improve exit success. Further, their industrial experience and the establishment of a local office mitigate the adverse effects of institutional distance.