“…In the context of buyouts, superior expertise can be of critical importance to successfully negotiate a deal (Petty, Bygrave, and Shulman ; Scholes et al ). As buyout transactions involve high uncertainty, complexity, and the risk of exploitation (Capron and Shen ; Olekalns and Smith ), disagreements between buyers and sellers on an appropriate transaction price are common (Scholes et al ).…”
Section: Hypothesesmentioning
confidence: 99%
“…Yet PE firms, as buyers, are able to develop superior expertise through education and experience, compared to the seller (Scholes, Westhead, and Burrows ; Wright and Robbie ), and use this expertise advantage to challenge and reduce the seller's price perception while structuring a deal in their interest. Sellers, in turn, might be able to counter buyers' negotiation power if comparable expertise can be utilized as a result of their own experience from previous buyouts, education, inside information, and/or the support of professional sale advisors (Petty, Bygrave, and Shulman ; Westhead and Howorth ). We hypothesize as follows H2: The higher the PE firm's expertise advantage relevant for the buyout deal, the higher the buying PE firm's perceived negotiation power .…”
The management buyout is an important exit strategy for small business owners. Negotiations of buyout deals have received little research attention to date. This is surprising given buyout negotiations' complexity giving rise to multiple issues that require consideration and often conflicting interests of deal parties. This paper examines perceived bargaining power in buyout negotiations between private equity (PE) firms and current owners who sell their business. We identify competition, expertise, and time pressure as key antecedents of PE firms’ perceived bargaining power and examine the moderating effect of PE firms' industry and size specialization in buyout negotiations. We use a sample of 176 respondents who each report on a particular buyout deal for a PE firm. The majority of respondents are seasoned PE professionals who held managing director or investment director positions.
“…In the context of buyouts, superior expertise can be of critical importance to successfully negotiate a deal (Petty, Bygrave, and Shulman ; Scholes et al ). As buyout transactions involve high uncertainty, complexity, and the risk of exploitation (Capron and Shen ; Olekalns and Smith ), disagreements between buyers and sellers on an appropriate transaction price are common (Scholes et al ).…”
Section: Hypothesesmentioning
confidence: 99%
“…Yet PE firms, as buyers, are able to develop superior expertise through education and experience, compared to the seller (Scholes, Westhead, and Burrows ; Wright and Robbie ), and use this expertise advantage to challenge and reduce the seller's price perception while structuring a deal in their interest. Sellers, in turn, might be able to counter buyers' negotiation power if comparable expertise can be utilized as a result of their own experience from previous buyouts, education, inside information, and/or the support of professional sale advisors (Petty, Bygrave, and Shulman ; Westhead and Howorth ). We hypothesize as follows H2: The higher the PE firm's expertise advantage relevant for the buyout deal, the higher the buying PE firm's perceived negotiation power .…”
The management buyout is an important exit strategy for small business owners. Negotiations of buyout deals have received little research attention to date. This is surprising given buyout negotiations' complexity giving rise to multiple issues that require consideration and often conflicting interests of deal parties. This paper examines perceived bargaining power in buyout negotiations between private equity (PE) firms and current owners who sell their business. We identify competition, expertise, and time pressure as key antecedents of PE firms’ perceived bargaining power and examine the moderating effect of PE firms' industry and size specialization in buyout negotiations. We use a sample of 176 respondents who each report on a particular buyout deal for a PE firm. The majority of respondents are seasoned PE professionals who held managing director or investment director positions.
“…Indeed, sellers might be highly concerned about the future of the business after the sale and want the firm ‘to be in good hands’ (Kammerlander, ). Sellers might also have an interest to stay informed about business matters or even want to be involved in management, advisory or governance roles (Petty, Bygrave and Shulman, ). We propose: H2 : From the perception of the PE firm, the sellers’ goal congruence with the PE firm is positively associated with sellers’ affective commitment in completed buyouts.…”
Section: Goal Congruencementioning
confidence: 97%
“…Indeed, sellers might be highly concerned about the future of the business after the sale and want the firm 'to be in good hands' (Kammerlander, 2016). Sellers might also have an interest to stay informed about business matters or even want to be involved in management, advisory or governance roles (Petty, Bygrave and Shulman, 1994). We propose:…”
In this paper we investigate private equity firm perceptions of sellers’ affective deal commitment in buyout transactions. Using a sample of 174 buyouts, we test trust, goal congruence and private equity reputation as potential antecedents of perceived deal commitment. We also examine whether and how different types of sellers, family versus non-family firms, moderate sources of perceived affective deal commitment. In sum, we find evidence that non-financial factors play a role in buyouts, particularly for family firm sellers
“…Megginson (2004) points out that exit routes strongly differ between the USA and Europe, with IPOs being the preferred exit route in the USA, but accounting for only 5% in Europe in 2002, while trade sales and write-offs accounted for 30% each. Among the few authors investigating trade sales as an exit route, Petty et al (1994) point to the fact that trade sales provide more immediate liquidity, but may not satisfy the objectives of the entrepreneur. The relative importance of exit routes also changes over time.…”
Venture Capital (VC) plays an important role in the commercialisation of innovation. Sectors like information and communication technologies and biotech account for two-thirds of all VC investments. Little attention has been paid to understanding how the venture capital market extends to new industries. Based on a survey of European energy technology VCs, we discuss the factors determining the emergence of a new market sector for VC investments. While there are sizeable investment opportunities, only 2-5% of all venture capital is invested in energy.Three factors can help explain differences between energy and other more popular VC sectors:• the perceived risk (market adoption risk, exit risk, technology risk, people risk, and regulatory risk) of investments in energy technologies • the perceived returns in energy VC investments • in an evolutionary perspective, the maturity of energy as a VC investment sector.
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