Studienarbeit aus dem Jahr 2010 im Fachbereich BWL - Investition und Finanzierung, Note: 2,7, FOM Essen, Hochschule für Oekonomie & Management gemeinnützige GmbH, Hochschulleitung Essen früher Fachhochschule, Veranstaltung: Investment and Controlling, Sprache: Deutsch, Abstract: This assignment is part of the MBA studies at the University of Applied Science in\nEssen (FOM, Hochschule für Oekonomie, Essen) and covers the subject "International\nFinance and Controlling".\nThe objective of this assignment was a critical analysis of Private Equity (PE)\ninvestments both from the perspectives of PE investors and of PE target companies. PE\ninvestors expect high returns, but it could be shown by taking independent data into\naccount that it is highly questionable if the returns of PE investments are always higher\ncompared to other forms of investments. Furthermore, there is the risk of a total loss,\nwhich is higher for PE investments than other forms of investments, especially due to\nthe information asymmetry between PE investors and PE issuers.\nLooking at it from the perspective of PE issuers, PE investments inject fresh capital into\ntarget companies with often a high percentage of debts. This capital can be used for\nexpansion and innovation. However, PE investors expect high returns and may use\nassets of the target company to refinance debts which have been taken in order to\nfinance the PE investment.\nFurthermore, PE companies will gain managerial control within the target company\nthrough which decisions are aligned with the objectives of the PE investor. This can\nalso include decisions regarding the future employment situation in the target company.\nThere cannot be an overall statement if PE investments are "good" or "bad" for both\nsides, because the outcome of an evaluation strongly depends on the statistical method,\nthe observed time span, the choice of statistical data and the personal viewpoint.
