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We explore the process of professionalization pre- and post-buyout (MBO) or buyin (MBI) of former private family firms using longitudinal evidence from six UK family firms undergoing an MBO/I in 1998. Professionalization behaviour was monitored up to 2014. Previous studies have conceptualized professionalization as a threshold to be attained. We demonstrate that professionalization is a complex process occurring in waves, triggered by changes in firm ownership and management. Waves of professionalization converge during the MBO/I process. Buyouts provide a funnelling mechanism enabling diverse control systems to be standardized. Post-MBO/I, divergence in the professionalization process reoccurs contingent on firm-specific contexts. Professionalization focuses on operations when stewardship relationships predominate, but on agency control mechanisms when there is increased potential for agency costs. Buyout organizational form is an important transitory phase facilitating the professionalization process. Professionalization is not a once-for-all development stage.

Placement of biliary endoprothesis with palliative intention in patients with MBO not amenable to surgical treatment is a frequently used technique. To present our clinical experience in the treatment of MBO with TE. Data were collected retrospectively from 7 patients with MBO that were treated with TE from 2014 to 2017. Clinical evolution, complications and overall survival were measured after TE. Median age 64 years (SD 10,33), 71% men, localization: pancreatobiliar 42%, colon 28%, other 28%. The most common complications were cholangitis and obstruction (71,4%), second TE was necessary in 5 patients (71.4%). The average survival after TE employment was 7,1months. Chemotherapy was administered in 4 patients (57,1%) after TE employment. This technique demonstrates benefits in the palliative management of metastatic patients allowing the possibility of further chemotherapy treatments. However, it's necessary to highlight the high risk of associated complications. Physicians should be aware of this at the moment of considering this technique in patients with MBO.

Critics claim that short-term profit orientation and high deal price strategies of private equity (PE) firms can negatively affect the ability of management buyouts to initiate and sustain entrepreneurial management. This study investigates this claim by comparing effects of majority PE backed and other buy-outs at different levels of financial leverage on post buy-out increases in entrepreneurial management. We propose that PE can be used as an organizational refocusing device that simultaneously increases entrepreneurial and administrative management. We find that majority PE-backed buy-outs significantly increase entrepreneurial management practices. Furthermore, the increased financial leverage positively affects administrative management in management buy-outs. However, the effect of high financial leverage is larger for majority PE-backed buy-outs. These results support the notion that PE firms help buy-out companies develop ambidextrous organizational change: i.e. simultaneously develop entrepreneurial and administrative management practices. The findings have important implications for practitioners and policy makers.

Management buyouts (MBOs) are an economically and legally significant class of transaction: not only do they account for more than $10 billion in deal volume per year, on average, but they also play an important role in defining the relationship between inside and outside shareholders in every public company. Delaware courts and lawyers in transactional practice rely heavily on \"market-check\" processes to ensure that exiting shareholders receive fair value in MBOs. This Article identifies four factors that create an unlevel playing field in that market check: information asymmetries, valuable management, management financial incentives to discourage overbids, and the \"ticking-clock\" problem. This taxonomy of four factors allows special committees and their advisors to assess the degree to which the playing field is level in an MBO, and (by extension) the extent to which a market canvass can provide a meaningful check on the buyout price. This Article then identifies more potent deal process tools that special committees can use to level the playing field: for example, contractual commitments from management that allow the board to run the process; pre-signingpre-signing rather than post-signing market checks; information rights rather than match rights; ex ante inducement fees; and approval from a majority of the disinterested shares. This Article also identifies ways that the Delaware courts can encourage the use of these more potent devices when appropriate: through the threat of entire fairness review, the application of Revlon duties, and the weight given to the deal price in appraisal proceedings. The result would be improved deal process design in MBOs and improved capital formation in the economy overall.

PurposeThis paper is a clinical examination of the October 2013 Management Buyout of Dell Inc. by founder Michael Dell and Silver Lake Partners for a total consideration of $13.88 per share. The proposed transaction was targeted by shareholders unhappy with the deal price and voting framework. Various shareholders went on to file an appraisal suit. Examining these events yields insights into shareholder rights issues in a major transaction.Design/methodology/approachThe paper examines events surrounding the acquisition including the negotiation process, go-shop period, shareholder activist demands for a higher price, shareholder voting and the subsequent appraisal trial and appeal.FindingsDespite suggesting Dell's board fulfilled its fiduciary duties, Delaware Vice Chancellor Travis Laster awarded petitioning shareholders $17.62 per share, a 27% premium to the final deal consideration. This article draws on Laster's decision and research examining topics raised by the surrounding events to argue minority shareholder interests were not sufficiently protected.Research limitations/implicationsThe Dell transaction represents only one data point. Moreover, Vice Chancellor Laster's decision was reversed on appeal.Originality/valueNevertheless, the paper discusses the nuances surrounding many issues of interest to practitioners involving large going private transactions. It could also be used to illustrate many “real world” perspectives in an advanced corporate finance or mergers and acquisitions class.

Epilepsy is a chronic neurological disorder that affects nearly 50 million people worldwide. Experimental evidence suggests that epileptic neurons are linked to the endocannabinoid system and that inhibition of the FAAH enzyme could have neuroprotective effects by increasing the levels of endogenous endocannabinoid anandamide. In this context, the use of macamides as therapeutic agents in neurological diseases has increased in recent years. With a similar structure to anandamide, several theories point to the FAAH–macamide interaction as a possible cause of FAAH enzymatic inhibition. In this work, we used in silico and in vivo techniques to analyze the potential therapeutic effect of three synthetic macamides in the treatment of epilepsy: N-3-methoxybenzyl-oleamide (3-MBO), N-3-methoxybenzyl-linoleamide (3-MBL), and N-3-methoxybenzyl-linolenamide (3-MBN). In the first stage, an in silico analysis was conducted to explore the energetic affinity of these macamides with rFAAH and their potential inhibitory effect. MD simulations, molecular docking, and MM/PBSA calculations were used for these purposes. Based on our results, we selected the two best macamides and performed an in vivo study to analyze their therapeutic effect in male Sprague Dawley rat models. Rats were subjected to an in vivo induction of epileptic status by the intraperitoneal injection of pilocarpine and analyzed according to the Racine scale. In silico results showed an energetic affinity of three macamides and a possible “plugging” effect of the membrane access channel to the active site as a potential cause of FAAH inhibition. On the other hand, the in vivo results showed an anticonvulsant effect of both macamides, with 3-MBL being the most active, resulting in a higher survival probability in the rats. This work represents one of the first studies on the use of macamides for the treatment of epilepsy.

A long-standing controversy is whether leveraged buyouts (LBOs) relieve managers from short-term pressures from public shareholders, or whether LBO funds themselves sacrifice long-term growth to boost short-term performance. We examine one form of long-run activity, namely, investments in innovation as measured by patenting activity. Based on 472 LBO transactions, we find no evidence that LBOs sacrifice long-term investments. LBO firm patents are more cited (a proxy for economic importance), show no shifts in the fundamental nature of the research, and become more concentrated in important areas of companies' innovative portfolios.

Purpose The purpose of this paper is to examine the effect of pre-acquisition earnings management on the performance of private firm management buyouts. Design/methodology/approach The study examines 291 UK private firms acquired by their managers between 2004 and 2012. Earnings management is investigated by means of cross-sectional discretionary accruals models, and estimated discretionary accruals are regressed on performance changes in the three years following acquisition. Findings Management buyouts of private firms are preceded by earnings overstatement and followed by performance deterioration. Private equity sponsored firms engage less in earnings management and remain more profitable than non-sponsored buyouts. Upward earnings managers cease to outperform industry after second post-buyout year, while aggressive earnings managers do not outperform industry at all. Discretionary total accruals are inversely associated with performance changes in the three years after buyout, and explain over 4 per cent of the changes in performance. Research limitations/implications Pertinent to the utilisation of private firms and their exemption from publishing cash flow statement, the study relies on accrual-based models for tests of earnings management. Originality/value The paper contributes to the mergers and acquisitions literature and value creation debate in buyouts by providing the first tests of earnings management and post-acquisition performance in private firm management buyouts.

The upside potential of privatization of both publicly traded firms and state-owned enterprises are examined through the lens of agency and entrepreneurial cognition theory. In addition to managerial incentives, it is argued that significant entrepreneurial progress is made through a cognitive shift from a managerial to an entrepreneurial mindset. These two perspectives provide a framework for understanding buyouts and how managerial incentives and individual cognition, considered in tandem, effectively expand managerial discretion and thereby stimulate upside growth.

We analyze the effect of external financing concerns on managers' financial reporting behavior prior to management buyouts (MBOs). Prior studies hypothesize that managers intending to undertake an MBO have an incentive to manage earnings downward to reduce the purchase price. We hypothesize that managers also face a conflicting reporting incentive associated with their efforts to obtain external financing for the MBO and to lower their financing cost. Consistent with our hypothesis, we find that managers who rely the most on external funds to finance their MBOs tend to report less negative abnormal accrual prior to the MBOs. In addition, the relation between external financing and abnormal accruals is tempered when there are more fixed assets that can serve as collateral for debt financing.