Small scale private equity: Demand versus supply

Bruce Dwyer; Keith Duncan; Colette Southam

Small scale private equity: Demand versus supply

Bruce Dwyer, Keith Duncan, Colette Southam

Bond Business School

Research output: Contribution to conference › Paper › Research › peer-review

Abstract

Pecking Order Theory predicts that corporate managers seeking external funding would preferentially use debt before equity (Myers 1984; Myers & Majluf 1984). Contrary to this expectation, our results suggest that a significant percentage (20% of generic SME and 29% of high growth firms (HGFs) respondents) of Australian small and medium-sized enterprises (SMEs) prefer equity funding to debt and would seek equity funding, if it were readily available. In exploring the supply side of small scale private equity (SSPE), our study reveals a mismatch between supply and demand, with supply being virtually non-existent, especially for those SMEs categorized as HGFs. In order to attract investment from PE firms, SMEs need to meet stringent criteria and our study found that only 1-2% of these firms have any chance of qualifying.

Original language	English
Publication status	E-pub ahead of print - Apr 2017
Event	8th Financial Markets and Corporate Governance Conference 2017 - Victoria University of Wellington, Wellington, New Zealand Duration: 20 Apr 2017 → 21 Apr 2017 Conference number: 8th http://www.victoria.ac.nz/sacl/financial-markets-and-corporate-governance-conference-2017

Conference

Conference	8th Financial Markets and Corporate Governance Conference 2017
Abbreviated title	FMCG
Country/Territory	New Zealand
City	Wellington
Period	20/04/17 → 21/04/17
Internet address	http://www.victoria.ac.nz/sacl/financial-markets-and-corporate-governance-conference-2017

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title = "Small scale private equity: Demand versus supply",

abstract = "Pecking Order Theory predicts that corporate managers seeking external funding would preferentially use debt before equity (Myers 1984; Myers & Majluf 1984). Contrary to this expectation, our results suggest that a significant percentage (20% of generic SME and 29% of high growth firms (HGFs) respondents) of Australian small and medium-sized enterprises (SMEs) prefer equity funding to debt and would seek equity funding, if it were readily available. In exploring the supply side of small scale private equity (SSPE), our study reveals a mismatch between supply and demand, with supply being virtually non-existent, especially for those SMEs categorized as HGFs. In order to attract investment from PE firms, SMEs need to meet stringent criteria and our study found that only 1-2% of these firms have any chance of qualifying.",

author = "Bruce Dwyer and Keith Duncan and Colette Southam",

year = "2017",

month = apr,

language = "English",

note = "8th Financial Markets and Corporate Governance Conference 2017, FMCG ; Conference date: 20-04-2017 Through 21-04-2017",

url = "http://www.victoria.ac.nz/sacl/financial-markets-and-corporate-governance-conference-2017",

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TY - CONF

T1 - Small scale private equity: Demand versus supply

AU - Dwyer, Bruce

AU - Duncan, Keith

AU - Southam, Colette

N1 - Conference code: 8th

PY - 2017/4

Y1 - 2017/4

N2 - Pecking Order Theory predicts that corporate managers seeking external funding would preferentially use debt before equity (Myers 1984; Myers & Majluf 1984). Contrary to this expectation, our results suggest that a significant percentage (20% of generic SME and 29% of high growth firms (HGFs) respondents) of Australian small and medium-sized enterprises (SMEs) prefer equity funding to debt and would seek equity funding, if it were readily available. In exploring the supply side of small scale private equity (SSPE), our study reveals a mismatch between supply and demand, with supply being virtually non-existent, especially for those SMEs categorized as HGFs. In order to attract investment from PE firms, SMEs need to meet stringent criteria and our study found that only 1-2% of these firms have any chance of qualifying.

AB - Pecking Order Theory predicts that corporate managers seeking external funding would preferentially use debt before equity (Myers 1984; Myers & Majluf 1984). Contrary to this expectation, our results suggest that a significant percentage (20% of generic SME and 29% of high growth firms (HGFs) respondents) of Australian small and medium-sized enterprises (SMEs) prefer equity funding to debt and would seek equity funding, if it were readily available. In exploring the supply side of small scale private equity (SSPE), our study reveals a mismatch between supply and demand, with supply being virtually non-existent, especially for those SMEs categorized as HGFs. In order to attract investment from PE firms, SMEs need to meet stringent criteria and our study found that only 1-2% of these firms have any chance of qualifying.

M3 - Paper

T2 - 8th Financial Markets and Corporate Governance Conference 2017

Y2 - 20 April 2017 through 21 April 2017

ER -

Small scale private equity: Demand versus supply

Abstract

Conference

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