Nisar, Tahir M.
Buyout strategies and performance measurement systems.
In, Venture Capital Networks, London, GB,
18 - 19 Mar 2010.
Buyouts normally have a life cycle that extends from deal structuring, changes in company management practice, and then, finally, harvesting investment. Underlying these phases of investment is the application of two discernible sets of strategies that reflect the buyout sponsors’ concern for creating a re-vitalized focus on performance. We develop and test a model to investigate buyout firms’ strategies associated with different stages of their development and their link with performance related management control systems (MCS). We find that focus strategies, the initial phase of the buyout’s life cycle, are positively related to objective control emphasizing measurement of output. However, when revenue maximization through differentiation becomes a priority, as is normally the case in the next stage of the buyout, did then subjective performance measures more commonly used. In terms of the impact of MCS on firm performance, we find a positive relationship between these systems and firm performance.
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