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Are Investors Committees in Private Equity and Venture Capital a Good Idea?

20 Pages Posted: 1 Feb 2012  

Antonio Gledson De Carvalho

Fundacao Getulio Vargas School of Business at Sao Paulo

Eduardo Madureira Rodrigues Siqueira

affiliation not provided to SSRN

Humberto Gallucci Netto

Fundacao Getulio Vargas School of Business at Sao Paulo

Date Written: January 12, 2012

Abstract

We investigate the determinants of success in PEVC with emphasis on the effect of investment committees staffed with limited partners (LP). Such committees could substitute for the ex post referral that creditors give in levered acquisitions when long-term credit is not available. We find that funds with investment committee under perform those without such board. This indicates that investors committees are not a good alternative for creditors’ referral. We also find that the success of investments depends on the characteristics of the funds; how investments are structured; individual characteristics of LPs and general partners (GP); and GPs management style. The results for individual variable are sensitive to how success is measured, suggesting that one should be careful at interpreting results based on a single measure of success.

Keywords: private equity, venture capital, investors committee, investment exit, performance

JEL Classification: G24

Suggested Citation

De Carvalho, Antonio Gledson and Siqueira, Eduardo Madureira Rodrigues and Gallucci Netto, Humberto, Are Investors Committees in Private Equity and Venture Capital a Good Idea? (January 12, 2012). Available at SSRN: https://ssrn.com/abstract=1995619 or http://dx.doi.org/10.2139/ssrn.1995619

Antonio Gledson De Carvalho (Contact Author)

Fundacao Getulio Vargas School of Business at Sao Paulo ( email )

R. Itapeva, 474 - 7o. andar
Sao Paulo 01313-902
Brazil
+5511 3281-7767 (Phone)

Eduardo Siqueira

affiliation not provided to SSRN ( email )

Humberto Gallucci Netto

Fundacao Getulio Vargas School of Business at Sao Paulo ( email )

R Itapeva, 474 11º. andar
São Paulo, São Paulo 01332-000
Brazil

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