Structure and determinants of financial covenants in leveraged buyouts - evidence from an economy with strong creditor rights

We apply control rights theory to explain the structure and determinants of financial covenants in private equity backed leveraged buyouts. We analyze 130 German transactions from 2000 to 2008, covering about 40 percent of the LBO market during this period. We consider Germany to be a superior institutional context as creditors have substantial rights in case of borrower default and contracts are negotiated more rigorously. Regarding structure we find that the financial covenant structure, in terms of number and types, is standardized and appears to be much more conservative than in the United States. Additionally, our results suggest that financial covenants are designed in a hierarchical manner, with the Debt to EBITDA covenant being the first to breach in early years. Regarding determinants we are the first, to our knowledge, to apply a direct measure of financial covenant restrictiveness, which is the real negotiated item between lead arrangers and sponsors. Our results show that financial covenant restrictiveness is significantly negatively related to the size of the private equity group, which serves as a proxy for reputation. Further we show that target-related factors, like growth and profitability, have a strong impact on financial covenant restrictiveness. With regard to transaction-based factors, increasing financial risk leads to more restrictive financial covenants. --financial covenants,leveraged buyouts,financing structure,control rights

Community development venture capital: concept and status quo in Germany

As most other countries, Germany also faces dramatic regional differences in terms of socioeconomic development. One important driver of such development is the existence of a healthy entrepreneurial activity and the creation of new companies. We argue that venture capital (VC) and especially community development venture capital (CDVC) can be a powerful instrument to stimulate entrepreneurship and to support the growth of ambitious companies. Hence, the present paper deals with the general questions, whether there are regional gaps in the supply of VC in Germany? Whether these regional gaps do geographically correspond to the most deprived areas in Germany, and which kind of VC companies are currently in place in order to close potential regional gaps? Geographically, we find that the north-eastern part of Germany is far more deprived than the rest of the country, but is relatively well supplied with VC. Nevertheless, the primary potential target area for CDVC activities in the country is the federal state of Brandenburg in this area. Our assessment of German players in the VC market reveals that some public VC companies do investments similar to CDVC. However, these companies do not offer real hands-on support for entrepreneurs, and real CDVC engagement in the country is yet to come. --regional development,community development venture capital,regional equity gap

Goal structures in family firms: empirical evidence on the relationship between firm and family goals

Goal structures in family firms seems of particular interest to the field as the overall orientation and the objectives of family firms are determined in an area of potential conflict between the two subsystems of firm and family. We asked shareholders of German family firms to rate the importance of certain goals in the organization's management. By doing a principal component analysis on the ratings given, we identified four central categories of goals that permit a much more detailed analysis than would a simple differentiation between family-related and firm-related goals. The differences among organizations in the identified dimensions of short-term and long-term family goals, as well as growth- and value-orientated firm goals are then assessed in more detail. Among other aspects, we found the existence of an advisory board to be the strongest driver of goal preferences along these dimensions. Theoretically, our findings indicate that, depending on family firm characteristics, agency and stewardship theory are both useful in explaining the goals of the relevant systems of family and firm. --family firms,goal preferences,agency theory,stewardship theory

Complete resolution of gastric amyloidosis after autologous stem cell transplantation.

A 48-year-old female with multiple myeloma (MM) and amyloidosis presented with massive upper gastrointestinal (GI) bleeding one week after autologous stem cell transplantation (autologous-SCT). Esophagogastroduodenoscopy (EGD) demonstrated necrotic, purple, pigmented, friable lesions throughout the stomach (Figure 1a), along with a bleeding ulcer in the cardia (Figure 1b, Video 1) which was successfully treated with epinephrine (1:10,000) injections. Biopsies demonstrated nodular amyloid deposition (Figures 2) which was Congo red positive. The patient had no further hematemesis and was discharged home 4 days later. Ten months after autologous-SCT, EGD revealed a normal stomach (Figure 3, Video 2) with no histologic evidence of amyloid

Photometry Results for the Globular Clusters M10 and M12: Extinction Maps, Color-Magnitude Diagrams, and Variable Star Candidates

We report on photometry results of the equatorial globular clusters (GCs) M10 and M12. These two clusters are part of our sample of GCs which we are probing for the existence of photometrically varying eclipsing binary stars. During the search for binaries in M10 and M12, we discovered the signature of differential reddening across the fields of the clusters. The effect is stronger for M10 than for M12. Using our previously described dereddening technique, we create differential extinction maps for the clusters which dramatically improve the appearance of the color-magnitude diagrams (CMDs). Comparison of our maps with the dust emissivity maps of Schlegel, Finkbeiner, & Davis (SFD) shows good agreement in terms of spatial extinction features. Several methods of adding an E_{V-I} zero point to our differential maps are presented of which isochrone fitting proved to be the most successful. Our E_{V-I} values fall within the range of widely varying literature values. More specifically, our reddening zero point estimate for M12 agrees well with the SFD estimate, whereas the one for M10 falls below the SFD value. Our search for variable stars in the clusters produced a total of five variables: three in M10 and two in M12. The M10 variables include a binary system of the W Ursa Majoris (W UMa) type, a background RR Lyrae star, and an SX Phoenicis pulsator, none of which is physically associated with M10. M12's variables are two W UMa binaries, one of which is most likely a member of the cluster. We present the phased photometry lightcurves for the variable stars, estimate their distances, and show their locations in the fields and the CMDs of the GCs.Comment: 22 pages, 21 figures, to be published in AJ October 2002. For a higher-resolution version of this paper, please visit http://www.astro.lsa.umich.edu/~kaspar/M10_M12_photometry.ps.gz (gzipped postscript) or http://www.astro.lsa.umich.edu/~kaspar/M10_M12_photometry.pdf (pdf file

The Role of Uncertainty in Data Breach Response Processes - A Reactance Theory Perspective

Data breaches lead to inherent uncertainty among customers due to the compromise of information and its potential consequences for customers, e.g., identity theft or credit card misuse. Previous research has focused on outcome-based strategies to address these negative impacts. However, informed by reactance theory, we argue that customers feel a loss of control due to the induced uncertainty and that companies need to tackle these impacts. We test our hypotheses in two empirical studies. The results of Study 1 suggest that data breaches indeed lead to an increased perception of uncertainty among customers. Study 2 examines to what extent the establishment of control can mitigate the negative uncertainty effects. We highlight that by providing customers with control, companies can reduce the degree of uncertainty and increase satisfaction with the response. By conceptualizing choice as a catalyst for perceived control, we offer practitioners a novel strategy for responding to data breaches

Data-driven Distributionally Robust Optimization over Time

Stochastic Optimization (SO) is a classical approach for optimization under uncertainty that typically requires knowledge about the probability distribution of uncertain parameters. As the latter is often unknown, Distributionally Robust Optimization (DRO) provides a strong alternative that determines the best guaranteed solution over a set of distributions (ambiguity set). In this work, we present an approach for DRO over time that uses online learning and scenario observations arriving as a data stream to learn more about the uncertainty. Our robust solutions adapt over time and reduce the cost of protection with shrinking ambiguity. For various kinds of ambiguity sets, the robust solutions converge to the SO solution. Our algorithm achieves the optimization and learning goals without solving the DRO problem exactly at any step. We also provide a regret bound for the quality of the online strategy which converges at a rate of $\mathcal{O}(\log T / \sqrt{T})$, where $T$ is the number of iterations. Furthermore, we illustrate the effectiveness of our procedure by numerical experiments on mixed-integer optimization instances from popular benchmark libraries and give practical examples stemming from telecommunications and routing. Our algorithm is able to solve the DRO over time problem significantly faster than standard reformulations

Characterization of the Growth of Chlamydia trachomatis in In Vitro-Generated Stratified Epithelium

Chlamydia infection targets the mucosal epithelium, where squamous and columnar epithelia can be found. Research on Chlamydia-epithelia interaction has predominantly focused on columnar epithelia, with very little known on how Chlamydia interacts with the squamous epithelium. The stratification and differentiation processes found in the squamous epithelium might influence chlamydial growth and infection dissemination. For this reason, three-dimensional (3D) organotypic stratified squamous epithelial cultures were adapted to mimic the stratified squamous epithelium and chlamydial infection was characterized. Chlamydia trachomatis infection in monolayers and 3D cultures were monitored by immunofluorescence and transmission electron microscopy to evaluate inclusion growth and chlamydial interconversion between elementary and reticulate body. We observed that the stratified epithelium varied in susceptibility to C. trachomatis serovars L2 and D infection. The undifferentiated basal cells were susceptible to infection by both serovars, while the terminally differentiated upper layers were resistant. The differentiating suprabasal cells exhibited different susceptibilities to serovars L2 and D, with the latter unable to establish a successful infection in this layer. Mature elementary body-containing inclusions were much more prevalent in these permissive basal layers, while the uppermost differentiated layers consistently harbored very few reticulate bodies with no elementary bodies, indicative of severely limited bacterial replication and development. For serovar D, the differentiation state of the host cell was a determining factor, as calcium-induced differentiation of cells in a monolayer negatively affected growth of this serovar, in contrast to serovar L2. The apparent completion of the developmental cycle in the basal layers of the 3D cultures correlated with the greater degree of dissemination within and the level of disruption of the stratified epithelium. Our studies indicate that the squamous epithelium is a suboptimal environment for growth, and thus potentially contributing to the protection of the lower genital tract from infection. The relatively more fastidious serovar D exhibited more limited growth than the faster-growing and more invasive L2 strain. However, if given access to the more hospitable basal cell layer, both strains were able to produce mature inclusions, replicate, and complete their developmental cycle

Myc regulates keratinocyte adhesion and differentiation via complex formation with Miz1

Myc plays a key role in homeostasis of the skin. We show that Miz1, which mediates Myc repression of gene expression, is expressed in the epidermal basal layer. A large percentage of genes regulated by the Myc–Miz1 complex in keratinocytes encode proteins involved in cell adhesion, and some, including the α6 and β1 integrins, are directly bound by Myc and Miz1 in vivo. Using a Myc mutant deficient in Miz1 binding (MycV394D), we show that Miz1 is required for the effects of Myc on keratinocyte responsiveness to TGF-β. Myc, but not MycV394D, decreases keratinocyte adhesion and spreading. In reconstituted epidermis, Myc induces differentiation and loss of cell polarization in a Miz1-dependent manner. In vivo, overexpression of β1 integrins restores basal layer polarity and prevents Myc-induced premature differentiation. Our data show that regulation of cell adhesion is a major function of the Myc–Miz1 complex and suggest that it may contribute to Myc-induced exit from the epidermal stem cell compartment