Study Of Private Equity Investment Funds Out Of The Way Impact Factors

The buyout market by private equity firms is becoming more and more heated all over the world. The understanding of the exit routes is of great importance both academically and practically.This paper focuses on the determinants of the choice of exit routes based on a sample of 721 PE backed exit deals that closed from 2000 to the end of 2006 in the Continent Europe. By using a multinomial logistics regression model, the paper is able to estimate the influence of each variable (company size, IPO volume, PE firm size, holding period etc.) on the choice of three common exit routes ( IPO, trade sale, and secondary buyout)Based on the multinomial logistics regression model, the study has found that holding period is significantly higher in the secondary buyout deals compared both with trade sale and IPO, Funds raised vs. funds invested ratio is also positively related to the proportion of the secondary buyout in total exit deals, which is consistent with the hypnosis that with longer holding period and the pressure to cash out, PE firms face less choice of exit route, and it also explains the large increase in resent years; The IPO volume or the listing climate also has influence on the choice of exit. However, the size of private fund firms, according to the result of this regression, is not statistically related to the exit strategy. When facing the choice between a trade sale and a secondary buyout, the retail & service industry show a positive preference for a trade sale to a secondary buyout.