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The Private Equity Market: An Overveiw
Open accessAbstract
The private equity market is an important source of funds for start‐up firms, private middle‐market firms, firms in financial distress, and public firms seeking buyout financing. Over the past fifteen years it has been the fastest growing corporate finance market, by an order of magnitude over the public equity and public and private bond markets. Despite its dramatic growth and increased significance for corporate finance, the private equity market has received little attention. This study examines the economic foundations of the private equity market, analyzes its development and current role in corporate finance, and describes the market's institutional structure. It examines the reasons or the market's explosive growth over the past fifteen years and highlights the main characteristics of that growth. It provides data on returns to private equity investors and analyzes the major secular and cyclical influences on returns. It describes the important investors, intermediaries, issuers, and agents in the market and their interactions with each other. Drawing on data from trade journals, the study also estimates the market's size as of year‐end 1995.
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“During the 1980s, approximately 15% of all IPOs were backed by venture capital, well out of proportion to the fraction of all ®rms that received venture capital.”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al., 1997
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“At origination, venture capitalists confront a signi®cant adverse selection problem associated with providing external ®nance to unusually opaque ®rms and therefore spend a considerable amount of time evaluating prospective issuers (Amit et al., 1990;Fried and Hisrich, 1994;Fenn et al., 1997).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al., 1997
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“Since 1990, this share has about doubled to 30% (Fenn et al., 1997).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al., 1997
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“Large ®rm LBOs typically involve raising substantial sums in the organized private equity markets (Fenn et al., 1997).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al., 1997
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“On the equity side, the median ®rm asset size was $16.0 million for venture-backed IPOs, and $23.3 million for nonventure-backed IPOs over 1991±1993 (Fenn et al., 1997).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al., 1997
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“Venture capital ± intermediated funds that are provided in a more formal market than angel ®nance ± provide 1.85% of small business ®nance.”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Fenn et al. (1997)
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Research works printed but not linked: 29
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Cited by
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N. Berger, A., & F. Udell, G. (1998) · Journal of Banking & Finance · doi:10.1016/s0378-4266(98)00038-7 · Cited by 3,690
“On the equity side, the median firm asset size was $16.0 million for venture-backed IPOS, and $23.3 million for nonventure-backed IPOS over 1991-93 (Fenn, Liang, and Prowse 1997).”
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Metadata
- Authors
- Fenn, G. W., Liang, N., & Prowse, S.
- Affiliations
- New York University (US)
- Venue
- Financial Markets, Institutions & Instruments
- Publisher
- Wiley
- Published
- 1997-11
- Volume
- 6
- Issue
- 4
- Pages
- 1-106
- ISSN
- 0963-8008 (ISSN-L)
- 1468-0416
- OpenAlex
- W2045438905
- Cited by
- 224
- References
- 0
- Citations by year
- 2026: 6 · 2025: 6 · 2024: 7 · 2023: 3 · 2022: 3 · 2021: 7 · 2020: 6 · 2019: 3 · 2018: 6 · 2017: 8 · 2016: 6 · 2015: 9 · 2014: 7 · 2013: 9 · 2012: 17
- FWCI
- 18.42
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- Financial Markets Institutions and Instruments (publishedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Private Equity and Venture Capital
- Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- private equity, buyouts, corporate finance, startup financing, financial distress, private equity returns, market growth, institutional framework, intermediaries, market size estimation
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