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An analysis of the management practices of Brazilian private equity firms and their impact on company performance

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  • Luiz Egydio Malamud Rossi
  • Roy Martelanc

Abstract

This paper examines the proposition that private equity funds (PEFs) improve the performance of their investee companies. The study was divided into two parts: (i) an analysis of the characteristics of the private equity investment cycle that impact on corporate performance and (ii) validation that companies that received investments from PEFs outperformed firms that did not receive an investment from PEFs. The analysis of the characteristics and practices of PEFs was based on questionnaires sent to the senior executives. Examination of the performance of companies that had attracted investment from PEFs was based on an analysis of various operational and financial indicators of firms in the three years preceding and following their initial public offering (IPO). This confirmed the thesis that there are common practices among PEFs and that they create value for their investees' companies.

Suggested Citation

  • Luiz Egydio Malamud Rossi & Roy Martelanc, 2013. "An analysis of the management practices of Brazilian private equity firms and their impact on company performance," Venture Capital, Taylor & Francis Journals, vol. 15(2), pages 151-172, April.
    • Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:151-172
    DOI: 10.1080/13691066.2013.802165
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    References listed on IDEAS

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    1. Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2015. "Do Private Equity Owned Firms Have Better Management Practices?," American Economic Review, American Economic Association, vol. 105(5), pages 442-446, May.
    2. Michael Ewens & Charles M. Jones & Matthew Rhodes-Kropf, 2013. "The Price of Diversifiable Risk in Venture Capital and Private Equity," The Review of Financial Studies, Society for Financial Studies, vol. 26(8), pages 1854-1889.
    3. Tobias J. Moskowitz & Annette Vissing-Jørgensen, 2002. "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?," American Economic Review, American Economic Association, vol. 92(4), pages 745-778, September.
    4. Driessen, Joost & Lin, Tse-Chun & Phalippou, Ludovic, 2012. "A New Method to Estimate Risk and Return of Nontraded Assets from Cash Flows: The Case of Private Equity Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 47(3), pages 511-535, June.
    5. Sharon Katz, 2008. "Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors," NBER Working Papers 14085, National Bureau of Economic Research, Inc.
    6. Diller, Christian & Kaserer, Christoph, 2004. "European private equity funds: A cash flow based performance analysis," CEFS Working Paper Series 2004-01, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
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    Cited by:

    1. Artie W. Ng & Douglas Macbeth & Leslie S. C. Yip, 2017. "Exploring performance drivers for technology-based ventures from early stage to expansion: perspectives of venture capitalists," Venture Capital, Taylor & Francis Journals, vol. 19(4), pages 335-359, October.

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