Reassessing the relationships between private equity
investors and their portfolio companies
Accepted: 11 October 2011 / Published online: 30 October 2011
Ó Springer Science+Business Media, LLC. 2011
Abstract The scope and purpose of this special issue
is to reassess the relationships between private equity
(PE) investors and their portfolio companies in the
light of the need for venture capital/ private equity
(VC/PE) ﬁrms to adapt their strategies for value
creation in the light of the recent ﬁnancial crisis. We
particularly focus upon VC/PE characteristics that
differently contribute to portfolio ﬁrm performance.
The papers presented in this special issue capture this
aim in various ways, reﬂecting the heterogeneity of
VC/PE investors and the ﬁrms in which they invest.
We begin this introductory paper by providing a brief
overview of each paper’s contribution. We articulate
themes for an agenda for future research relating to the
heterogeneity of investor types and the contexts in
which they invest.
Keywords Private equity Á Venture capital Á
Business angels Á Investor heterogeneity Á Overview Á
JEL Classiﬁcations G24 Á G32 Á L26 Á M13
Literature on venture capital (VC) and private equity
(PE) depicts a broadly positive view of their activities.
Detailed reviews of formal VC are provided by
Manigart and Wright (2012), of PE by Wright et al.
(2009) and of business angel VCs by Kelly (2007). Most
empirical studies covered by these reviews ﬁnd that the
post-investment growth and/or performance of inves-
tors’ portfolio companies is higher than that of non-
venture capital backed companies. This positive effect is
attributed to investment managers’ selection skills (e.g.
Shepherd 1999; Baum and Silverman 2004), their value-
adding activities leading to professionalization of
portfolio companies (e.g. Sapienza et al. 1996;Baum
and Silverman 2004; Colombo and Grilli 2010), the
tightened post-investment governance of portfolio
companies including monitoring activities (e.g. Filatot-
chev et al. 2006), the provision of additional ﬁnancial
resources (e.g. Hellmann et al. 2008;JanneyandFolta
2006; Vanacker and Manigart 2010) and the transfer of
reputation and legitimacy to portfolio companies (e.g.
Timmons and Bygrave 1986).
S. Manigart (&)
Ghent University and Vlerick Business School,
Centre for Management Buy-out Research and Imperial
College Business School, London, UK
Ghent University, Ghent, Belgium
Small Bus Econ (2013) 40:479–492