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 inEssen (FOM, Hochschule für Oekonomie, Essen) and covers the subject InternationalFinance and Controlling .The objective of this assignment was a critical analysis of Private Equity (PE)investments both from the perspectives of PE investors and of PE target companies. PEinvestors expect high returns, but it could be shown by taking independent data intoaccount that it is highly questionable if the returns of PE investments are always highercompared to other forms of investments. Furthermore, there is the risk of a total loss,which is higher for PE investments than other forms of investments, especially due tothe information asymmetry between PE investors and PE issuers.Looking at it from the perspective of PE issuers, PE investments inject fresh capital intotarget companies with often a high percentage of debts. This capital can be used forexpansion and innovation. However, PE investors expect high returns and may useassets of the target company to refinance debts which have been taken in order tofinance the PE investment.Furthermore, PE companies will gain managerial control within the target companythrough which decisions are aligned with the objectives of the PE investor. This canalso include decisions regarding the future employment situation in the target company.There cannot be an overall statement if PE investments are good or bad for bothsides, because the outcome of an evaluation strongly depends on the statistical method,the observed time span, the choice of statistical data and the personal viewpoint.
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