 Equity-worthiness and equity-willingness: Key factors in private equity dealsArturo Capasso (), Rosario Faraci and Pasquale Massimo Picone Business Horizons, 2014, vol. 57, issue 5, 637-645 Abstract: While access to private equity funds (PEFs) provides a unique opportunity for firms to set up sturdy growth paths, how PEFs select companies is an unknown process to entrepreneurs and business owners. This study aims to offer insights regarding the private equity market to entrepreneurs searching for external capital. We analyzed a novel dataset of 240 pre-deal negotiations between small- and medium-sized Italian companies and a closed-end fund. Results indicate that the successful closing of a deal depends on more than just the target firm's equity-worthiness (i.e., the company's ability to meet the expectations of a private equity investor). In fact, there is another dimension: the target firm's equity-willingness (i.e., the company's motivations to accept an outside equity investor). We summarize the results of our study by building a 2x2 positioning matrix on the basis of the target firm's equity-worthiness and equity-willingness. This matrix enables entrepreneurs to grasp how private equity investors evaluate their firms. Keywords: Entrepreneurs; Financing; Private equity; Pre-deal negotiation; Worthiness and willingness (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:bushor:v:57:y:2014:i:5:p:637-645 DOI: 10.1016/j.bushor.2014.05.006 Access Statistics for this article Business Horizons is currently edited by C. M. Dalton More articles in Business Horizons from Elsevier |
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