What Drives Private Equity Minority Acquisitions? A Multiple-Case Analysis On The Influences And Determinants Within The Investment Decision Process

In the light of the turbulent changes in the international financial markets in recent years, the investments of Private Equity operators in minority stakes represent a powerful tool to link the objectives of financial returns of the investors with the urgent need of firms to support their development. Despite the untapped potential of this type of transactions and although they represent around 25% of the Private Equity industry, minorities remain a topic that receives little interest from academic literature.The objective of this thesis is to extend the research over the investment decision processes in minority transactions. By answering the question "What drives Private Equity minority investments?", the thesis aims to contribute to the literature by identifying the determinants that drive PE toward investing in a minority.Using within-case and cross-cases analyses of 10 cases built upon interviews with 10 of the major operators in the Italian minority market, the research finds that the investment decision is positively influenced by characteristics internal to the investing subject.In particular, based on the Behavioral Decision Theory and a set of theories derived from it, the thesis finds that internal influences occur in three sequential steps:first of all the internal characteristics of Human Capital, Organizational Learning and Ownership Structure influence the definition of the Investment Strategy in minorities. Secondly, the Investment Strategy influences the endowment of Financial Resources, Human Capital, Organizational Learning and Investment Approach that the operator provides itself in order to achieve such strategy. Finally, analyzing the influence that such endowments have on the Investment Decision, the research finds that Financial Resources don’t constitute an active influence source, while Human Capital, Organizational Learning and Investment Approach are the most relevant determinants to positively influence PE operators in investing in minorities.