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

Joern Block, Christian Fisch, Silvio Vismara*, René Andres

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

115 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)329-352
Number of pages24
JournalJournal of Corporate Finance
Volume58
DOIs
Publication statusPublished - Oct 2019

Bibliographical note

JEL classification: G24, L26, G11, M13, G30
Publisher Copyright:
© 2019 The Authors

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