Title: An econometric study of the determinants of high tech private equity investment in Europe

Authors: Bernard Guilhon; Sandra Montchaud

Addresses: SKEMA Business School, 60 rue Dostoïevski, 06902 Sophia Antipolis, France ' CHERPA, Sciences Po Aix, 25 rue Gaston de Saporta, 13625 Aix-en-Provence, France

Abstract: Our paper aims at identifying the main determinants of high tech private equity (HTPE) investment in Europe. From an analysis of the basic conditions in the PE industry, we have performed an econometric study based on a sample of 17 European countries. The explanatory variables reflect the macroeconomic, institutional, exit, and innovation environments. The results underline the positive impact of the interest rate which shows the prevalence of a demand effect. A favourable tax and legal framework also has a positive influence as has the exit context which degree of impact varies according to the exit channel in favour of public offering (PO) compared to trade sale (TS). Business enterprise research and development (BERD) expenditure, total RD staff, researchers and patents applications have a positive impact on HTPE investment, which is stronger when variables are focused on the HT area.

Keywords: private equity investment; high tech private equity; high technology; macroeconomic situation; institutional environment; exit conditions; innovation dynamics; Europe; econometrics; interest rates; tax framework; legal framework; law; public offerings; trade sales; research and development; R&D expenditure; R&D staff; patents; patent applications.

DOI: 10.1504/IJESB.2016.079426

International Journal of Entrepreneurship and Small Business, 2016 Vol.29 No.3, pp.441 - 467

Available online: 16 Sep 2016 *

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