Equity-Worthiness and Equity-Willingness: Key Factors In Private Equity Deals Case Solution

This Case is about  FINANCIAL MANAGEMENT, NEGOTIATIONS

PUBLICATION DATE: September 15, 2014 PRODUCT #: BH631-PDF-ENG

While accessibility to private equity funds (PEFs) supplies a distinctive opportunity for businesses to set up growth trajectory,how PEFs select businesses is an unknown procedure to company owners and entrepreneurs.This study offers insights regarding the private equity market to entrepreneurs observant for external capital.

We examined a novel dataset of 240 pre-deal discussions between small- and medium-sized Italian firms as well as a closed-end fund.Outcomes suggest that the successful closure of a deal depending on more than the target firm’s equity-worthiness (i.e., the company’s aptness to meet the demands of a private equity investor). Actually, there’s an alternative measurement: the target firm’s equity-openness (i.e., the business’s motivations to accept an exterior equity investor).

We summarize the outcomes of our study by constructing a 2×2 placement matrix on the foundation of the target company’s equity- equity and worthiness -openness. This matrix enables entrepreneurs to understand private equity investors’ businesses are evaluated by them.

Equity-Worthiness and Equity-Willingness: Key Factors In Private Equity Deals Case Solution
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