Private equity group reputation and financing structures in German leveraged buyouts

This study examines the relationship between the reputation of a private equity group and the financing structures used in leveraged buyouts within the context of the German leveraged loan market. In Germany, most buyouts are private-to-private transactions and banks still hold a dominant position as debt providers. Further, there is less institutional demand pressure due to the less heterogeneous group of institutional investors involved in syndicated loans. These particularities explain our main findings: While private equity sponsor reputation is related to the amount and structure of debt used as well as the amount of lender control imposed, it does not have an impact on interest costs of German leveraged loans.