Skill, syndication, and performance: Evidence from leveraged buyouts

This paper studies why buyout firms syndicate and how this influences buyout performance. I find evidence that skill plays an important role in syndication and its effect on performance. The results suggest low-skill firms utilize syndication to pool skill, resources, and information to overcome firm-specific deficiencies and improve performance, but no such effect exists for high skill firms. This evidence is robust to potential endogeneity concerns and other alternative explanations. Additionally, this paper is the first to use a robust statistical network methodology studying the formation of syndication networks that allows for a consistent estimation of effects within the network despite the lack of independence among observations.