Why do European Venture Capital Companies syndicate?

Financial theory, resource-based theory and access to deal flow are used to explain syndication practices among European venture capital (VC) firms. The desire to share risk and increase portfolio diversification is a more important motive for syndication than the desire to access additional intangible resources or deal flow. Access to resources is, however, more important for non-lead than for lead investors. When resource-based motives are more important, the propensity to syndicate increases. Syndication intensity is higher for young VC firms and for VC firms, specialised in a specific investment stage. Finally, syndication strategies are similar across European countries, but differ from North American strategies.

The planned decision to transfer an entrepreneurial company.

The Theory of Planned Behavior (TPB) is used in this paper to empirically study whether an entrepreneur successfully transfers his/her firm, conditional on exiting the firm. TPB posits that entrepreneurial intentions drive actions, being the transfer of a business. We expand the TPB framework with business characteristics (intangible assets and profitability) to further explain the gap between intentions to transfer and the transfer outcome. Based on survey responses of 198 Belgian entrepreneurs that exited their company between 2001 and 2006, we show that intentions drive transfer outcomes. Further, the personal desirability of a transfer, the perceived control over the transfer process and the level of intangible assets influence intentions. Business profitability has a direct positive effect on the probability of transferring a business, that is partially mediated through intentions.

Entrepreneurial Buyout Monitor. A clear view on investment results 2013 - outlook 2014

Welcome to the first edition of the Entrepreneurial Buyout Monitor – a snapshot of the trends and challenges involved in management buyouts and buy-ins of SMEs in Belgium from a practitioner’s perspective. We captured the opinion of 175 buyout experts in Belgium – including bankers, private equity players, lawyers, brokers and M&A advisers. There has been a general lack of understanding and transparency of the smaller segment of the buyout market. Here, we give insights and trends on the general investment climate for SME buyouts, including: 1) Deal flow 2) Deal-making 3) Financing Overall, the results indicate the investment climate has generally improved and this is expected to continue in 2014. The key insights from the survey are: 1) Deal flow is increasing – but with greater levels of competition and a lack of professionally run SMEs with the potential to be transferred, sourcing high-quality deals remains challenging 2) Lending conditions continue to be challenging – putting pressure on investment returns and urging investors to look for alternative deal structures 3) Investors have to be more proactive – focusing on targets with the potential to add value through cutting costs or pursuing growth opportunities 4) Potential vendors need to be realistic – and either adjust their price expectations or wait for improved operating results and an uplift in multiples when the economic climate improvesBD

Why start from scratch when you buy your own company? 10 frequent mistakes when buying a small business

Rather than start a new company from scratch, entrepreneurs often choose to buy a small business instead. But many people underestimate how complex and time consuming this process can be. Our white paper sets out ten frequent mistakes people make when buying a small business

Entrepreneurial Buyout Monitor. A clear view on investment results 2014 - outlook 2015

Welcome to the second edition of the Entrepreneurial Buyout Monitor – a snapshot of the trends and challenges involved in management buyouts and buy-ins of SMEs in Belgium from a practitioner’s perspective. We captured the opinions of 169 buyout experts in Belgium – including bankers, private equity investors, mezzanine players, family offices, lawyers, brokers and M&A advisers. Overall, the results indicate the investment climate has considerably improved – as expected from last year’s edition. The outlook for 2015 remains positive. The key insights from the survey are: 1) DEAL FLOW IS INCREASING – however, with higher levels of competition and more favourable lending conditions, we’ve also seen higher multiples – especially for medium sized and larger deals. It’s tougher to achieve attractive returns, so the deal origination process is critical. 2) MORE FAVOURABLE DEBT MARKETS – overall debt multiples increased and the cost of lending significantly dropped. This was true for medium sized and larger deals. However, lending conditions continue to be challenging for smaller deals – so they may need more creative deal structures. 3) ALTERNATIVE INVESTORS BECOME MORE PROMINENT – both family offices and mezzanine investors become more active in smaller MBO/MBI transactions. 4) PRIVATE EQUITY INVESTORS NEED A CLEAR STRATEGY – they need a more focussed approach to finding opportunities for growth while cutting costs. And so they must gain a deeper understanding – and further insights into the sectors they’re targeting.BD

The planned decision to transfer an entrepreneurial company

We expand and test Ajzen’s Theory of Planned Behavior (TPB) to explain the transfer of an entrepreneurial venture upon exit. Our results confirm TPB: transfer intentions and perceived control over the transfer are the main drivers of the likelihood to transfer. In addition, contextual business characteristics complement TPB in explaining transfer outcomes. While intangibility of firm assets directly impacts transfer outcomes, business viability is partially mediated via transfer intentions. These results shed more light on the role of implicit planning in transfer decisions and help to better understand contextual factors impacting the process of entrepreneurial exits

Governance implications of attracting external equity investors in private family firms

While research has commonly assumed that business-owning families are concerned about the preservation of control, families are increasingly seeking cooperation with external investors to accomplish firm- or family-level goals. In this paper, we provide a conceptual configuration of the different governance scenarios that may arise when family owners attract outside capital. Combining two important family objectives-(a) to provide liquidity either to the family or to the firm, and (b) to cede or to retain long-term family control-we identify four scenarios with different governance implications and preferred types of external investors. Our analysis increases understanding of the evolving structures of ownership in private family firms, the effectiveness and efficiency of governance arrangements in family firm-external investor cooperation, and the increasingly heterogeneous private equity funding landscape