Original scientific paper
https://doi.org/10.1080/1331677X.2023.2271058
Determinants of the performance of private equity backed SMEs: an empirical analysis at the European level
Gimede Gigante
Nora Di Cesare
Andrea Cerri
Abstract
This paper extends previous research to investigate the determinants
of the operating performance of small and medium-sized
enterprises (SMEs) backed by private equity (PE). The paper is
based on a sample of 208 unique private equity-backed firms
operating at the European level. A multivariate linear regression
model is estimated, in which the private equity-backed firms’
operating performance—as measured by ROA, Revenues/Total
Assets, and EBIT/Total Assets—is a function of a variety of factors.
These include whether or not the firm is an SME, the presence of
family shareholders, and various features specific to the expertise
of the private equity investor, as well as the industry, country,
and years covered. The analysis is limited to private equity deals
that occurred in the European Region between 2005 and 2017.
According to the results, the effectiveness of private equity in
improving the operating performance of target companies in the
three years post-investment is impacted by whether or not the
backed firm is an SME. This research paper aims to further existing
publications on the link between the involvement of the private
equity investor and the status of the backed firm as an SME.
Keywords
Private equity; SMEs; operating performance determinants; multivariate linear regression model; financial crisis and covid-19 impacts
Hrčak ID:
321736
URI
Publication date:
23.4.2024.
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