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Venture Capital and Other Private Equity: a Survey
Author(s) -
Metrick Andrew,
Yasuda Ayako
Publication year - 2011
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2011.00606.x
Subject(s) - private equity , club deal , private equity secondary market , equity capital markets , private equity firm , private equity fund , venture capital , business , equity risk , private investment in public equity , portfolio , finance , financial economics , economics
We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and their investors (limited partners), and how/whether these contractual designs affect outcomes. Findings highlight the importance of private ownership, and information asymmetry and illiquidity associated with it, as a key explanatory factor of what makes private equity different from other asset classes.