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Fueling the buyout machine: fundraising in private equity

Robert Loos () and Bernhard Schwetzler ()
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Robert Loos: HHL Leipzig Graduate School of Management
Bernhard Schwetzler: HHL Leipzig Graduate School of Management

Financial Markets and Portfolio Management, 2017, vol. 31, issue 4, 397-443

Abstract: Abstract This paper analyzes the impact of performance, investment-firm-related, and macroeconomic variables on fundraising activities in private equity (PE). We use a novel, backward-looking approach to link current to preceding funds, which allows for including several parallel predecessor funds in our analysis. We employ logit and tobit models to a global sample of 1463 fundraising events observed between 2000 and 2010 in order to estimate the probability of raising and the volume of follow-on funds. Our results show that the average buyout duration of past transactions has a negative impact, whereas exits via an initial public offering (IPO) and deals without industry-style drift positively affect fundraising activities. Larger, industry-diversified, and independent PE firms exhibit a higher likelihood of fundraising and collect larger amounts.

Keywords: Fundraising; Follow-on fund; Private equity; Leveraged buyout (search for similar items in EconPapers)
JEL-codes: G23 G24 G30 G34 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:kap:fmktpm:v:31:y:2017:i:4:d:10.1007_s11408-017-0298-8