Private equity deal success and pre-acquisition determinants - empirical evidence from Germany

摘要

Shortly after a fall-back linked to recent financial crises, private equity investing has been undergoing a strong revival, especially in Germany. In a country known for the large number of small- and medium-sized companies, private equity investors can profit from a large choice of potential targets. Researchers have been broadly studying the field of private equity for many years, especially exploring post-investment value creation. But most articles missed to address the importance of pre-acquisition determinants such as target characteristics. Under these circumstances, this study focuses on exploring the relationship between pre-acquisition target characteristics and deal performance by analysing a sample of 125 transactions in Germany using an ordinal logistic regression analysis. The findings suggest that asset lightness, management experience and the healthcare industry are positively linked to the deal success by increasing the likelihood of achieving a higher return category. This implies that private equity investors active in Germany could outperform if they set according to investment preferences. Similarly, investors are likely to get a higher return from general partners who invest in companies presenting such characteristics.