Recent research on the investment behavior of private equity fund managers
Volume: 11 Topics in Corporate Finance
Price: € 20.00
By D. Cumming, G. Fleming and A. Schwienbacher 2005, ISBN 90-778590-2-0
The growing importance of private equity is closely related to the core mission of the Amsterdam Center for Corporate Finance, which centers around the financial management of corporations and the functioning of the financial sector. Private equity has become an indispensable part of the modern financial markets. For these reasons, the ACCF dedicates the eleventh issue of its Topics in Corporate Finance series to this important topic.
Private equity has become an important funding source for corporations in various stages of development. Venture capital, and seed-capital in particular, are types of private equity that aim at funding new initiatives. Private equity for more established operations is much in the news as well. Almost daily we read in the newspapers that a private equity firm has taken control of a particular business activity, often in need of future expansion or restructuring. The investment behavior of these private equity investors is the subject of this booklet.
In this study, Professor Douglas Cumming (Severino Center for Technological Entrepreneurship, Rensselaer Polytechnic Institute), Grant Fleming (Wilshire Private Markets Group) and Armin Schwienbacher (University of Amsterdam) focus on the investment behavior of private equity fund managers. What drives their investment choices? What types of activities do they invest in, and what determines this. Moreover, to what extent is private equity a predictable asset class for institutional investors? We should not interpret predictability in terms of low risk but in terms of adhering to ex ante announced objectives and investment guidelines. These questions are of considerable importance for assessing the growth potential of the industry, and ultimately for the viability and availability of private equity as a source of funding.
We trust that you will find the insights interesting and hope that you enjoy reading it, so that it may contribute to bridging the gap between theory and practice.