Winning a Deal in Private Equity: Do Educational Ties Matter?
39 Pages Posted: 4 Jun 2016 Last revised: 24 Aug 2018
Date Written: July 1, 2018
In this paper, we investigate the role of educational ties in private equity. We find that educational ties between the management teams of acquiring funds and the target company are more likely for the acquiring fund compared to a set of benchmark funds, which did not invest in the same company. We argue that educational ties between fund managers and CEOs of target companies play a (positive) role in sourcing deals and winning competitive transactions. Exclusivity of educational ties tends to matter more than the university from which it derives. However, the evidence that such educational ties produce higher returns for investors is limited at best.
Keywords: Buyout, Deal Sourcing, Deal Performance, Educational Ties, Investment Choice
JEL Classification: G11, G15, G24, G34
Suggested Citation: Suggested Citation