Work

Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels, and family offices

Year: 2019

Type: article

Abstract: We use an experimental conjoint analysis to investigate the investment criteria of 749 private equity investors, distinguishing between family offices, business angels, venture capital funds, growth equity funds, and leveraged buyout funds. Our results indicate that revenue growth is the most important investment criterion, followed by the value-added of product/service, the management team's track record, and profitability. Regarding differences across investor types, we find that family offices, growth equity funds, and leveraged buyout funds place a higher value on profitability as compared to business angels and venture capital funds. Venture capital funds, in turn, pay more attention to companies' revenue growth, business models, and current investors. With these results, our study contributes to the corporate finance literature by deepening our understanding of how different types of private equity investors make investment decisions.

Source: Journal of Corporate Finance

DOI: 10.1016/j.jcorpfin.2019.05.009

Authors: Joern Block, Christian Fisch, Silvio Vismara, René Andres

Institutions: Universität Trier, Erasmus University Rotterdam, University of Bergamo, Ghent University

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $1,229

Funder: Deutsche Forschungsgemeinschaft