Private Equity Fundraising and Firm Specialization

42 Pages Posted: 9 Oct 2012 Last revised: 5 Jun 2015

See all articles by Maia Gejadze

Maia Gejadze

IESEG School of Management

Pierre Giot

Facultés Universitaires Notre-Dame de la Paix (FUNDP)

Armin Schwienbacher

SKEMA Business School

Date Written: May 10, 2015

Abstract

Using a firm-level perspective, this study examines the effect of specialization on the fundraising activities of private equity (PE) firms. In the empirical analysis, we consider three dimensions of specialization: stage, industry and geographic location. Using a large sample of U.S. PE firms, we find that firms specialized across all dimensions raise new funds more quickly than generalists only if the type of the new fund coincides with the current area of the firm’s expertise, suggesting that expertise cannot be easily extended to other areas. We further explore what explains the observed link and provide evidence supporting the idea that specialization accelerates future fundraising through increased value-adding to the current portfolio of PE firms. Further analyses indicate that PE firms willing to increase future capital commitments may consider specializing across industries and stages since they are positively related to the size of follow-up funds.

Keywords: Private equity, specialization, fundraising, competing risks model

JEL Classification: G2, G24, G3

Suggested Citation

Gejadze, Maia and Giot, Pierre and Schwienbacher, Armin, Private Equity Fundraising and Firm Specialization (May 10, 2015). Available at SSRN: https://ssrn.com/abstract=2083649 or http://dx.doi.org/10.2139/ssrn.2083649

Maia Gejadze

IESEG School of Management ( email )

3, Rue de la Digue
Lille, 59000
France

Pierre Giot (Contact Author)

Facultés Universitaires Notre-Dame de la Paix (FUNDP) ( email )

Rempart de la Vierge 8
B-5000 Namur
Belgium

Armin Schwienbacher

SKEMA Business School ( email )

Lille
France

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