Abstract
The objective of this work is to contribute to the understanding of decisions, styles and preferences in relation to exit processes for European buyout investments. A focus of the analysis has been set on decision determinants regarding exit processes, critically evaluating concepts and theories established and proven in studies which concentrate almost exclusively on the Northern American venture capital market. Additionally, relationships between the characteristics of buyout investors and their exit behaviour have been examined. While section 2 provided an introduction to the private equity industry, the leveraged buyout segment and also outlined basics about divestments, section 3 established the theoretical foundation for the empirical analysis and laid out a detailed review of relevant scientific studies. Section 4 dwelled into aspects to be considered at the various stages of typical exit processes and comparatively assessed different divestment alternatives such as trade sales and secondary buyouts, IPOs, buybacks, and recapitalisations. Building upon the first four sections, part 5 presented the empirical study, which is mainly based on a detailed dataset for a sample of 56 buyout investors.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Examples for venture capital concepts and findings that are confirmed by the results of this study include Gompers’ (1996) ‘grandstanding’ theory. which suggests a link between exits and fundraising requirements. and the relevance of portfolio company size as a determinant of exit route choice. indicated by Wall and Smith (1997).
Examples for venture capital concepts and findings that cannot be supported by the results of this study include the ‘value-add and monitoring cost’ concept. according to which resource constraints at private equity firms can trigger divestments (Gifford 1997. Cumming and Macintosh 2001. 2003b) and transaction costs as a decision factor regarding the choice of exits channel (Wall and Smith 1997. Leschke 2003).
Aiello and Watkins (2000. pp. 100–107) provide a helpful guideline for the preparation of successful acquisition negotiations. supporting this argument.
Funds-of-funds strongly demand a tradability of investments in private equity funds that is already gradually resulting in a ‘secondary market’ for shares in private equity funds (EVCA 2005c. pp. 17–21). This is expected to reinforce the trends to a more open disclosure of transaction details and individual funds’ performance data.
Rights and permissions
Copyright information
© 2007 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
(2007). Conclusion. In: Private Equity Exits. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-70954-1_6
Download citation
DOI: https://doi.org/10.1007/978-3-540-70954-1_6
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-70953-4
Online ISBN: 978-3-540-70954-1
eBook Packages: Business and EconomicsBusiness and Management (R0)