Why Similar Leveraged Buyouts Produce Divergent Outcomes: Comparative Evidence from the Korean Private Equity Market

Abstract

This paper examines why leveraged buyouts (LBOs) employing similar financial structures generate divergent performance outcomes. Based on comparative case analysis of leading Korean private equity firms—MBK Partners, IMM Private Equity, and Hahn & Company—including the Homeplus, AirFirst, and K Car cases, the study argues that leverage alone does not determine buyout performance. Instead, outcomes hinge on alignment among industry structure, leverage strategy, and the feasibility of post-acquisition operational intervention under institutional and stakeholder constraints. When aligned, leverage supports value creation through investment and capability building; when misaligned, it amplifies fragility by constraining adjustment and intensifying financial distress.