Management buy-outs, control procedures and performance: the case of unlisted French SMEs acquired by their managers (2002-2012)

This article studies the evolution of growth and performance of non-listed French SMEs acquired through a Management BuyOut (MBO) and the influence of Private Equity funds in this process. According to the agency theory, this type of acquisition can offer many benefits: new financing capacities, reduction of agency costs, improvement of operating efficiency. However, these positive effects must be counterbalanced by the reduction of investment and the increase of bankruptcy costs. The empirical study is built on a propensity score matching model from a sample of 208 MBOs carried out on French SMEs between 2002 and 2012. The results show that the growth and the performance of acquired SMEs is not faster nor stronger than the growth of matched companies. On the other hand, if the development of SMEs under MBO seems to accelerate after the buyout, the influence of PE funds does not appear significant in this process.