IDEAS home Printed from https://ideas.repec.org/p/vlg/vlgwps/2006-24.html

Who gets private equity? The role of debt capacity, growth and intangible assets

Author

Listed:
  • Baeyens, K.
  • Manigart, S.

    (Vlerick Leuven Gent Management School)

Abstract

While informed private equity (PE) investors screen for the most promising ventures, firms may avoid raising of PE for issues of cost and control. A critical question therefore is: which firms get PE? We consider both supply and demande side arguments to study the characteristics of a sample of 231 firms that did receive PE and compare them to those of a matched sample. Supporting the pecking order theory, we show that firms rely on PE funding when there are no alternatives, i.e.when their debt capacity is limited, due to financial and bankruptcy risk and due to important investments in intangibles. PE investors, from their side, select firms with substantial growth options. Further, firms that receive PE have grown more before the funding event than companies that did not receive PE.

Suggested Citation

  • Baeyens, K. & Manigart, S., 2006. "Who gets private equity? The role of debt capacity, growth and intangible assets," Vlerick Leuven Gent Management School Working Paper Series 2006-24, Vlerick Leuven Gent Management School.
    • Handle: RePEc:vlg:vlgwps:2006-24
    as

    Download full text from publisher

    File URL: http://www.vlerick.be/en/2466-VLK/version/default/part/AttachmentData/data/vlgms-wp-2006-24.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Chiappini, Raphaël & Montmartin, Benjamin & Pommet, Sophie & Demaria, Samira, 2022. "Can direct innovation subsidies relax SMEs’ financial constraints?," Research Policy, Elsevier, vol. 51(5).
    3. Borell, Mariela & Heger, Diana, 2013. "Sources of value creation through private equity-backed mergers and acquisitions: The case of buy-and-build strategies," ZEW Discussion Papers 13-094, ZEW - Leibniz Centre for European Economic Research.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vlg:vlgwps:2006-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Isabelle Vandenbroere (email available below). General contact details of provider: https://edirc.repec.org/data/vlgmsbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.