Club Deals and LBO Pricing: A Study on the Implications of Bidding Consortia

Abstract: Concerns have been raised that collaboration amongst LBO sponsors might constitute a form of anti-competitive behaviour and could negatively affect deal pricing. This paper provides an empirical investigation of the pricing implications of club deals relative to single sponsor LBOs. Employing a sample of 617 LBOs in the period from 1996 to 2007, it is found that, on the whole, club deals do not exhibit significantly lower pricing levels than single sponsor deals after controlling for transaction characteristics.