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Winning a Deal in Private Equity: Do Educational Networks Matter?

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Listed:
  • Fuchs, Florian
  • Fuess, Roland
  • Jenkinson, Tim
  • Morkoetter, Stefan

Abstract

Networks can establish business connections and facilitate information flows. But how valuable are they in competitive settings, such as the deal generation of private equity? We find that educational ties between acquiring partner and target firm management are frequent (around 15%) and increase the odds of winning a deal (by 79%). When competing with other funds, exclusivity rather than the school’s ranking matters. In addition, educational ties also allow mitigating prevailing home bias. Yet, the pure existence of network-based relationships does not automatically lead to better deal performance.

Suggested Citation

  • Fuchs, Florian & Fuess, Roland & Jenkinson, Tim & Morkoetter, Stefan, 2017. "Winning a Deal in Private Equity: Do Educational Networks Matter?," Working Papers on Finance 17155, University of St. Gallen, School of Finance.
    • Handle: RePEc:usg:sfwpfi:2017:15
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1715.pdf
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    Cited by:

    1. Wang, Ye & Yin, Sirui, 2018. "CEO educational background and acquisition targets selection," Journal of Corporate Finance, Elsevier, vol. 52(C), pages 238-259.

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    More about this item

    Keywords

    Investment Choice; Deal Sourcing; Networks; Social Ties; Buyout;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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