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Fueling the buyout machine: fundraising in private equity

Author

Listed:
  • Robert Loos

    (HHL Leipzig Graduate School of Management)

  • Bernhard Schwetzler

    (HHL Leipzig Graduate School of Management)

Abstract

This paper analyzes the impact of performance, investment-firm-related, and macroeconomic variables on fundraising activities in private equity (PE). We use a novel, backward-looking approach to link current to preceding funds, which allows for including several parallel predecessor funds in our analysis. We employ logit and tobit models to a global sample of 1463 fundraising events observed between 2000 and 2010 in order to estimate the probability of raising and the volume of follow-on funds. Our results show that the average buyout duration of past transactions has a negative impact, whereas exits via an initial public offering (IPO) and deals without industry-style drift positively affect fundraising activities. Larger, industry-diversified, and independent PE firms exhibit a higher likelihood of fundraising and collect larger amounts.

Suggested Citation

  • Robert Loos & Bernhard Schwetzler, 2017. "Fueling the buyout machine: fundraising in private equity," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 31(4), pages 397-443, November.
    • Handle: RePEc:kap:fmktpm:v:31:y:2017:i:4:d:10.1007_s11408-017-0298-8
    DOI: 10.1007/s11408-017-0298-8
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    Cited by:

    1. Hull, Tyler J., 2021. "The effect of venture capitalists straying from their industry comfort zones," Journal of Business Venturing Insights, Elsevier, vol. 16(C).

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    More about this item

    Keywords

    Fundraising; Follow-on fund; Private equity; Leveraged buyout;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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