"An unfair advantage"?
Subtitle: combining banking with private equity investing
By: Lily Fang, Victoria Ivashina, Josh Lerner
Contributors: Ivashina, Victoria; Lerner, Joshua; Harvard Business School
Series: Working paper / Harvard Business School -- 10-106; Working paper (Harvard Business School) -- 10-106.
Publisher: Harvard Business School
Published: 2010
Place of publication: [Boston]
Language: eng
Number of pages: 43
Description: We explore the phenomenon and economics of private equity investments by bank-affiliated groups. Between 1983 and 2009, bank-affiliated private equity groups accounted for over a quarter of all private equity investments. Banks' involvement increases during peaks of the private equity cycles. In particular, deals done by bank-affiliated groups are financed at significantly better terms than other deals when the parent bank is part of the lending syndicate, especially during market peaks. Investments made by bank-affiliated groups have slightly worse outcomes than non-affiliated investments, despite the targets having superior performance prior to investments. Investments during market peaks by commercial banks have significantly higher rates of bankruptcy. The involvement of a bank's private equity subsidiary in a deal significantly increases the odds of the parent bank being selected as future lenders, advisors, and underwriters. Collectively, these findings suggest that there are risks in combining banking and private equity investing.
Notes: "June 2010"--Publisher's website.

"April 14, 2010"--added t.p.

Includes bibliographical references.