Frédéric Perdreau

Industry specialization of private equity firms: a source of buy-out performance heterogeneity

Abstract This study sheds new light on the industry specialization of private equity (PE) firms as a source of buy-outs’ performance and on the conditions under which these firms can add value to the buy-outs in which they invest. Advantages to specialization are based on specific resources and capabilities that confer the PE funds advantages both in the pre- and post-transaction phases. We argue that the magnitude of the advantages to industry specialization will depend on the criticality of these specific resources for buy-outs’ performance improvements. Industry specialization will confer advantages when the target company is weakly or strongly performing before the buy-out because, in that context, performance improvements are more difficult to reach. The analysis is based on a sample of 217 PE-backed buy-outs completed in France between 2001 and 2007. The results show that relative specialization in the industry of the buy-out company results in profit increases of 7.5% greater than buy-outs backed by non-industry-specialized PE firms. Industry specialization also contributes to target company growth, especially when performance improvements are difficult to reach. Besides, the magnitude of the positive industry specialization effect varies between PE firms. This result emphasizes industry specialization as a strategic variable by illustrating heterogeneity in the ability to construct a competitive advantage.

Strategic Groups in the French Franchising Sector

This empirical article provides a picture of the French franchising sector, based on the strategic group approach. We use a recent four-year panel dataset from the French Federation of Franchising, regarding the period 2010-2013, and sophisticated statistical and supervised learning models.Five main strategic groups of franchisors are distinguished in the French system, characterized by specific strategies and performance outcomes. We survey first the literature dealing with strategic groups, then we conduct a multidimensional Statistical analysis (Principal Components Analysis and Ascending Hierarchical Clustering), highlighting three factorial axes and five clusters. We test the stability of network behaviors with a classification model. Finally, we observe and comment the differences in the strategic group performances.

The dynamics of contractual design: determinants of contract duration in franchising networks

This paper deals with the contractual design in franchising networks. We investigate the determinants and the evolution of contracts duration on the basis of a multidisciplinary approach using law, management and economics. Taking into account the traditional explanation of franchise contracts duration in terms of specific investments, this paper focuses on the dynamics of contractual design. The empirical analysis is based on franchise French data, coupled with financial data. We use descriptive statistics and econometrics. A dynamic panel data model for contract length is estimated. Our results highlight specific dynamics and adjustment costs in the determination of contracts duration.