Private equity ﬁrms (PE ﬁrms) have become common owners of established ﬁrms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise mergerstable industry. This can help antitrust authorities maximize consumer surplus because previously privately unproﬁtable—but consumer surplus-enhancing—mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.
Threatening to Buy: Private Equity Buyouts and Antitrust Policy
Scientific Article in English