2011
DOI: 10.1016/j.rfe.2011.09.001
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Abstract: Using a unique proprietary data set of 1980 realized and unrealized buyouts completed between 1986 and 2010, we examine entry and exit pricing in buyouts and its influence on private equity (PE) sponsors' returns. We find that besides leverage and operational improvements, EBITDA multiple expansion (i.e. the difference between entry and exit pricing) is a fundamental factor in explaining equity returns and the result of skill rather than pure luck. We also provide evidence that more experienced PE sponsors use… Show more

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Cited by 52 publications
(44 citation statements)
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References 55 publications
(178 reference statements)
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“…Our analysis is based on a data set sourced from two leading European private equity fund‐of‐funds. This way, we follow recent studies that do not rely purely on self‐reported data (Achleitner, Braun, & Engel, 2011; Harris et al, 2011; McKenzie & Janeway, 2011). The two deal‐level databases are, therefore, the result of comprehensive data collection processes.…”
Section: The Datamentioning
confidence: 85%
See 1 more Smart Citation
“…Our analysis is based on a data set sourced from two leading European private equity fund‐of‐funds. This way, we follow recent studies that do not rely purely on self‐reported data (Achleitner, Braun, & Engel, 2011; Harris et al, 2011; McKenzie & Janeway, 2011). The two deal‐level databases are, therefore, the result of comprehensive data collection processes.…”
Section: The Datamentioning
confidence: 85%
“…The respective fund managers utilize information on historical deal returns in order to optimize their internal asset allocation decisions. Accordingly, every time VC firms address potential investors – so‐called LPs such as fund‐of‐funds investors – to raise new funds, they are required to provide detailed information for the investors' due diligence efforts (Achleitner et al, 2011). As a result, the databases contain anonymous deal‐level information on various characteristics of the portfolio companies that the fund‐seeking VC firms have previously invested in.…”
Section: The Datamentioning
confidence: 99%
“…Our sample forms a subset of databases compiled by three European funds of funds as part of their due diligence effort and represents an updated version of the dataset used in Achleitner et al (2011). It contains transaction-level data, including the sponsor-level cash flow data of 2,456 buyout transactions entered between 1990 and 2010.…”
Section: Datasetmentioning
confidence: 99%
“…First‐time VC funds that lack a reputation are represented by a dummy variable that equals one if the investing VC fund is a first‐time fund ( first time fund ). In line with Hochberg et al (2007) and Achleitner et al (2011) we use first time fund as reputation measure since it assures that these fund managers have not yet established strong relations to their limited partners and therefore are in specific need to build up their reputation which is an aspect particularly important in the timing of the exit decision. Behind this implementation lies the argumentation outlined by Gompers (1996) that first‐time VC funds have a high need for building up their reputation 8 .…”
Section: Data Sample and Descriptive Statisticsmentioning
confidence: 99%