ABSTRACT
The agency perspective of buyouts was initially proposed by Jensen and was based on private equity (PE) buyouts of publicly listed firms. The ability of PE firms to effect successful turnarounds is key to their successful involvement in all buyouts from failure but particularly in buyouts of failing independent companies. Most buyouts from insolvency are purchases of parts of failed groups rather than attempts to rescue whole firms. A good example of this is the buyout of Denby from Coloroll. The parent company Coloroll ran into financial difficulties and was forced to sell Denby. Management teams and PE firms with the right skills can take advantage of recessions and can, in doing so, help to stimulate the economy by rescuing ailing companies and even save national treasures like old-established former family firms such as Whittards and Denby. Whittards of Chelsea provides an example of a deal using a pre-pack administration arrangement.
