TY - JOUR
T1 - Private equity investment criteria
T2 - An experimental conjoint analysis of venture capital, business angels, and family offices
AU - Block, Joern
AU - Fisch, Christian
AU - Vismara, Silvio
AU - Andres, René
N1 - JEL classification: G24, L26, G11, M13, G30
Publisher Copyright:
© 2019 The Authors
PY - 2019/10
Y1 - 2019/10
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85066866197&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2019.05.009
DO - 10.1016/j.jcorpfin.2019.05.009
M3 - Article
AN - SCOPUS:85066866197
SN - 0929-1199
VL - 58
SP - 329
EP - 352
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
ER -