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Rivals or partners? Evidence from Europe's international private equity deals

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  • Schertler, Andrea
  • Tykvová, Tereza

Abstract

Cross-border private equity deals have increased substantially in recent years. This study looks at the issue of how European investors view their local counterparts in the portfolio companies? home countries. If they regard them as rivals, they will target countries that lack a private equity industry. If they view them as (potential) partners, however, they will prefer investing in countries with a mature private equity industry. We test these two contradictory hypotheses by using a unique cross-border country dataset on international investments of European private equity investors. We find that European investors predominantly invest in countries with more mature private equity industries. The presence of local private equity investors also determines how European investors exploit differences in growth rates between the target country and their home country : European private equity investors respond more strongly to given growth differentials if investments can be syndicated with an experienced local investor. In our reading, these findings are in line with the partnership hypothesis.

Suggested Citation

  • Schertler, Andrea & Tykvová, Tereza, 2006. "Rivals or partners? Evidence from Europe's international private equity deals," ZEW Discussion Papers 06-091, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5484
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    More about this item

    Keywords

    Private Equity; Internationalization; Transnational Syndication;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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