The importance of divestitures for firms altering their scope has been noted across research, with the active role of Private Equity (PE) constituting a large proportion of worldwide dealmaking. With the uprise in repeated PE ownership exits, known as secondary buyouts, targets are undergoing repeated PE exits, and repeated PE ownership cycles. However, we know little about the impact of repeated PE ownership succession for the target, where repeated ownership cycles may enable value creation through extended temporal investments from financial owners or signal internal complexities that were difficult to remedy under one ownership cycle. Our study uses a matched dataset of 1,947 PE targets, tracked from their initial acquisition by PE to final divestment to demonstrate the detrimental effects of repeated PE successive ownership cycles for a target’s value growth – creating a ‘hot potato’ effect. Further, by examining the importance of coherence between entry and exit strategies, this research disentangles the facets of repeated ownership, ownership succession and value creation. Overall, our study maps the entire trajectory of PE ownership, to contribute insights into how ownership creates value, how the investment of time acts as a cue for this value and delineates the ways in which modern forms of ownership can create value through succession.
