Skip to main content

Main menu

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JAI
    • Editorial Board
    • Published Ahead of Print (PAP)
  • CAIA Member Login
  • IPR Logo
  • Home
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • More
    • Awards
    • Article Licensing
    • Academic Use
  • LinkedIn
  • Twitter
  • Facebook
  • YouTube

User menu

  • Sample our Content
  • Subscribe Now
  • Log in

Search

  • Advanced search
The Journal of Alternative Investments
  • IPR Logo
  • Home
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • More
    • Awards
    • Article Licensing
    • Academic Use
  • Sample our Content
  • Subscribe Now
  • Log in
The Journal of Alternative Investments

The Journal of Alternative Investments

Advanced Search

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JAI
    • Editorial Board
    • Published Ahead of Print (PAP)
  • CAIA Member Login
  • LinkedIn
  • Twitter
  • Facebook
  • YouTube
Article

Deal Pricing and Returns in Private Equity

Benjamin Puche and Reiner Braun
The Journal of Alternative Investments Winter 2019, jai.2018.1.067; DOI: https://doi.org/10.3905/jai.2018.1.067
Benjamin Puche
is a research fellow at the Center for Entrepreneurial and Financial Studies at Technische Universität München in Munich, Germany. benjamin.puche@tum.de
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
Reiner Braun
is a professor of Entrepreneurial Finance at the Center for Entrepreneurial and Financial Studies at Technische Universität München in Munich, Germany. reiner.braun@tum.de
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
  • Article
  • Info & Metrics
  • PDF
Loading

This article requires a subscription to view the full text. If you have a subscription you may use the login form below to view the article. Access to this article can also be purchased.

Abstract

Deal returns of private equity (PE) transactions are strongly influenced by EV/EBITDA multiple expansion, which in turn is the result of differences in deal pricing from entry to exit. This article sheds light on how relative pricing, in comparison to market price levels, influences multiple expansion and thus deal returns. The authors analyze the influence of both market price levels by themselves, as well as of deal pricing in relation to those market price levels. In addition, they analyze the influence of this relative pricing on final deal returns. Using a sample of 2,174 unique PE transactions, they find that multiple expansion is an important factor in explaining deal returns. The authors further find that buying low and selling high in comparison to market prices from the same segment positively influences multiple expansion. While there is a need for both, selling high yields about twice as much as buying low. They attribute a skill set to general partners who are investing in PE deals, as general partners can influence the pricing when buying or selling companies through their negotiations. Because a negotiation is something entered consciously, the outcome—resulting in deal pricing—is not based on luck alone. The authors thus recommend that limited partners providing capital to PE funds look for fund managers with this skill set as it can help achieve higher than normal returns in their transactions and funds.

  • © 2018 Pageant Media Ltd
View Full Text

Don’t have access?

IPR Journals is the leading provider of applicable theoretical research for all those in the investment management community. Benefit from access to our content including:

  • Unrestricted access to all 11 Journals ​
  • Enhanced Search and Browse Functionality
  • Topic Searches and handpicked curated Collections 
  • A full archive of content going back to 1974

SAMPLE OUR CONTENT >>

INQUIRE ABOUT A SUBSCRIPTION >>

Log in using your username and password

Forgot your user name or password?
Back to top

Explore all content across our journals

  • Topics
  • Journals
  • Authors
  • Highlights
  • Collections

In this issue

The Journal of Alternative Investments: 21 (3)
The Journal of Alternative Investments
Vol. 21, Issue 3
Winter 2019
  • Table of Contents
  • Index by author
Print
Download PDF
Article Alerts
Sign In to Email Alerts with your Email Address
Email Article

Thank you for your interest in spreading the word on The Journal of Alternative Investments.

NOTE: We only request your email address so that the person you are recommending the page to knows that you wanted them to see it, and that it is not junk mail. We do not capture any email address.

Enter multiple addresses on separate lines or separate them with commas.
Deal Pricing and Returns in Private Equity
(Your Name) has sent you a message from The Journal of Alternative Investments
(Your Name) thought you would like to see the The Journal of Alternative Investments web site.
Citation Tools
Deal Pricing and Returns in Private Equity
Benjamin Puche, Reiner Braun
The Journal of Alternative Investments Dec 2018, jai.2018.1.067; DOI: 10.3905/jai.2018.1.067

Citation Manager Formats

  • BibTeX
  • Bookends
  • EasyBib
  • EndNote (tagged)
  • EndNote 8 (xml)
  • Medlars
  • Mendeley
  • Papers
  • RefWorks Tagged
  • Ref Manager
  • RIS
  • Zotero
Save To My Folders
Share
Deal Pricing and Returns in Private Equity
Benjamin Puche, Reiner Braun
The Journal of Alternative Investments Dec 2018, jai.2018.1.067; DOI: 10.3905/jai.2018.1.067
del.icio.us logo Digg logo Reddit logo Twitter logo CiteULike logo Facebook logo Google logo LinkedIn logo Mendeley logo
Tweet Widget Facebook Like LinkedIn logo

Jump to section

  • Article
    • Abstract
    • DATA AND METHODOLOGY
    • RESULTS
    • SUMMARY OF RESULTS AND IMPLICATIONS
    • FUTURE RESEARCH AND OUTLOOK
    • ENDNOTES
    • REFERENCES
  • Info & Metrics
  • PDF

Cited By...

  • No citing articles found.
  • Google Scholar

More in this TOC Section

  • Editor’s Letter
  • INVITED EDITORIAL COMMENT: Foreword for JAI Special Issue on New Frontiers of Alternative Investments
  • Editor’s Letter
Show more Article

Similar Articles

LONDON
One London Wall, London, EC2Y 5EA
United Kingdom
+44 207 13 1600
 
NEW YORK
41 Madison Avenue, 20th Floor, New York, NY 10010
USA
+1 646 931 9045
iprjournals@pageantmedia.com
 

Stay Connected

  • LinkedIn
  • Twitter
  • Facebook
  • YouTube

MORE FROM IPR

  • Home
  • Awards
  • Investment Guides
  • Videos
  • About IPR Journals

INFORMATION FOR

  • Academics
  • Agents
  • Authors
  • Content Usage Terms

GET INVOLVED

  • Advertise
  • Publish
  • Article Licensing
  • Subscribe Now
  • Log In
  • Update your profile
  • Give us your feedback

© 2018 Pageant Media Ltd | All Rights Reserved | ISSN: 1520-3255 | E-ISSN: 2168-8435

  • Site Map
  • Terms & Conditions
  • Privacy Policy
  • Cookies