A Note on Secondary Buyouts-Creating Value Or Recycling Capital‪.‬

1. Introduction The profitability of a private equity (PE) investments critically depends on the realization of a successful exit strategy to terminate an investment [1,2] Throughout the 1990s and until the year 2000, PE investments were primarily exited through initial public offerings (IPOs) [3]. Later, this once highly attractive exit channel for PE investors was not longer attractive or available anymore. Because of the sluggish economy and the dwindling acquisition funds of corporations, the sale of equity shares to trade buyers also decreased. Thus, due to highly difficult market conditions, the traditional investment exit routes, IPOs and trade sales, turned out to be highly challenging [4].