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The Private Equity Market: An Overveiw

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  • George W. Fenn
  • Nellie Liang
  • Stephen Prowse

Abstract

The private equity market is an important source of funds for start‐up firms, private middle‐market firms, firms in financial distress, and public firms seeking buyout financing. Over the past fifteen years it has been the fastest growing corporate finance market, by an order of magnitude over the public equity and public and private bond markets. Despite its dramatic growth and increased significance for corporate finance, the private equity market has received little attention. This study examines the economic foundations of the private equity market, analyzes its development and current role in corporate finance, and describes the market's institutional structure. It examines the reasons or the market's explosive growth over the past fifteen years and highlights the main characteristics of that growth. It provides data on returns to private equity investors and analyzes the major secular and cyclical influences on returns. It describes the important investors, intermediaries, issuers, and agents in the market and their interactions with each other. Drawing on data from trade journals, the study also estimates the market's size as of year‐end 1995.

Suggested Citation

  • George W. Fenn & Nellie Liang & Stephen Prowse, 1997. "The Private Equity Market: An Overveiw," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 6(4), pages 1-106, November.
    • Handle: RePEc:wly:finmar:v:6:y:1997:i:4:p:1-106
    DOI: 10.1111/1468-0416.00012
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    Cited by:

    1. Ingo Geburtig & Thomas Mählmann & Roberto Liebscher, 2025. "Dual holdings and shareholder–creditor agency conflicts: Evidence from the syndicated loan market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 52(1), pages 222-260, February.
    2. Hajime TADOKORO & Yuji HONJO, 2026. "Will Unicorns be Born in Japan? A comparative study of private equity market development and policy reforms," Discussion papers 26051, Research Institute of Economy, Trade and Industry (RIETI).
    3. Li, Yong & Zahra, Shaker A., 2012. "Formal institutions, culture, and venture capital activity: A cross-country analysis," Journal of Business Venturing, Elsevier, vol. 27(1), pages 95-111.
    4. Simone Boccaletti & Annalisa Ferrando & Emanuele Rossi & Monica Rossolini, 2025. "European SMEs’ growth: the role of market-based finance and public financial support," Small Business Economics, Springer, vol. 64(2), pages 691-727, February.
    5. Ener, Hakan & Dávila, Antonio, 2023. "What makes search fund entrepreneurship different in Europe?," European Management Journal, Elsevier, vol. 41(4), pages 488-498.

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