Can Club Deals Reduce Institutional Barriers to Cross-Border LBOs?

A common suggestion for facilitating cross-border investment is to partner with a firm in the target nation. Unfortunately, high quality partners are not always available. We hypothesize and test whether investment syndicates consisting of nationally diverse private equity (PE) investors provide an attractive alternative to local partners for overcoming institutional barriers to cross-border investment. Our empirical results show that syndicates have on average lower institutional distance from the target than deals involving a single PE-firm and that diverse syndicates provide mitigating effects to increase the probability of successful deal completion while reducing negotiating time