Publications
Abstract:
Growth equity (GE) funds have emerged as the third major private equity asset class—alongside venture capital (VC) and buyout (B/O) funds--for investors, and as an important new source of external equity capital for private companies and entrepreneurs wishing to fund growth without surrendering control. GE funds have the same organizational and operational structure as VC and B/O funds, and their private-firm investments generally fall on the corporate finance spectrum between late-stage VC and buyout financing. Virtually unknown before 2000, GE funds now invest over $100 billion annually, have AUM of more than $1.1 trillion, and dry powder totaling $350 billion. Their emergence as a key corporate finance tool has allowed entrepreneurial firms to remain private much longer than in the past and in many ways GE financing has replaced going public as a source of growth capital. We define growth equity funding and trace the development of GE fund-raising and investment as described in the professional literature. We also analyze a large sample of VC, GE, and B/O funds and deals drawn from the Preqin database and show that GE shares characteristics with both VC and B/O funding but should be considered a distinct new asset class and corporate finance vehicle. We conclude by briefly describing a suggested GE research agenda.
Keywords: Private Equity; Growth Equity; Venture Capital; Buyouts.
JEL Classification: F140, G28.
Presentations: 7th Entrepreneurial Finance Association Conference (2023), University of New Mexico (2023), Dalhousie University (2023), Barcelona School of Economics Summer Forum -- Entrepreneurship (2023), Bulgarian Council for Economic Analyses (BCEA) Annual Conference (2023), University of Oklahoma (2023), FMA Annual Meeting (2022).
Megginson, W. L., & Munteanu, A. (2022). Privatization and State Ownership in a (Hopefully) Post-Pandemic World. World Bank.
Abstract:
This study summarizes the recent economic and political developments relating to the privatization of state-owned enterprises and then surveys the extensive recent research examining these issues empirically. Until the onset of the Global Financial Crisis of 2008-09, there was an unambiguous global trend towards reducing government ownership of business enterprise, but this trend has since at least been slowed, and perhaps even reversed. We discuss the factors that have promoted a global resurgence of state ownership, then assess whether privatization remains a viable policy option for improving the operating and financial performance of divested companies. Recent performance studies continue to document significant improvements after companies are divested. We also examine when, where, and how governments decide to privatize individual companies and how these sales are priced. Recent academic and professional research categorizes and evaluates various types of state owners; examines determinants of the level of state ownership; studies how state ownership impacts the valuation of corporate assets and examines the relative efficiency of state versus private ownership; and assesses how state ownership impacts corporate financial policies, especially capital investment. This research highlights that different types of state owners have very different impacts on corporate value and performance and that state ownership generally has a significant, and most pernicious, impact on corporate investment and financial policies. The separate effect of state ownership on corporate valuation is less clear-cut. This survey concludes by summarizing recent empirical research examining the relationship between state ownership of business assets and financial markets and institutions and shows that almost all studies examining state-owned banking show that state ownership reduces banks’ efficiency.
JEL Classification: G32, G15, G38.