Winning a Deal in Private Equity: Do Educational Ties Matter?

49 Pages Posted: 4 Jun 2016 Last revised: 25 Aug 2019

See all articles by Florian Fuchs

Florian Fuchs

University of St. Gallen - School of Finance

Roland Füss

University of St. Gallen - School of Finance

Tim Jenkinson

University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

Stefan Morkoetter

University of St. Gallen - School of Finance

Date Written: August 23, 2019

Abstract

In this paper, we investigate the role of educational ties in private equity. Although we cannot observe all the funds that bid for a target company, we construct the set of potential bidders based upon their size and investment cycle, as well as the location and sector of their target companies. By gathering detailed educational histories of fund partners and CEOs of target firms, we find a significantly higher incidence of educational ties in completed deals than exists among the set of potential bidders. We argue that educational ties between fund managers and CEOs of target companies play a (positive) role in sourcing deals and winning competitive transactions. The alma maters of CEOs and private equity partners are notably concentrated among the top universities, and we find that exclusivity of educational ties is important. However, we find no evidence that such educational ties produce higher returns for investors.

Keywords: Buyout, Deal Sourcing, Deal Performance, Educational Ties, Investment Choice

JEL Classification: G11, G15, G24, G34

Suggested Citation

Fuchs, Florian and Füss, Roland and Jenkinson, Tim and Morkoetter, Stefan, Winning a Deal in Private Equity: Do Educational Ties Matter? (August 23, 2019). AFFI/EUROFIDAI, Paris December 2016 Finance Meeting EUROFIDAI - AFFI; University of St.Gallen, School of Finance Research Paper No. 2017/15. Available at SSRN: https://ssrn.com/abstract=2787578 or http://dx.doi.org/10.2139/ssrn.2787578

Florian Fuchs (Contact Author)

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland
+65 6850 7334 (Phone)
+41 71 224 70 88 (Fax)

Roland Füss

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland
+41 (0)71 224 70 42 (Phone)
+41 (0)71 224 70 88 (Fax)

HOME PAGE: http://www.sbf.unisg.ch/en/Lehrstuehle/Lehrstuhl_Fuess.aspx

Tim Jenkinson

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288916 (Phone)
+44 1865 288831 (Fax)

HOME PAGE: http://www.sbs.oxford.edu/timjenkinson

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Stefan Morkoetter

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

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