Private Equity and Venture Capital Investment

This doctoral thesis is focused on the most progressive part of alternative financing for small business nowadays, on Private Equity and Venture Capital. Despite its undeniable importance, compared to the more traditional ways of collecting financial resources for further business development, only very little research has been done in this area from the point of view of economics sciences. The recent world financial crisis has only served to highlight the importance of Private Equity. However, the theory is still unable to provide answers to many questions raised by practice. In view of that, the main aim of the thesis is to provide detailed description of the field, examine the current trends in Private Equity investment and introduce Private Equity as one of the most perspective systems of business activity financing. The thesis is divided into three main parts. The definition of financial market, its functioning as well as the main agents are included in the first part of the dissertation. The second part deals with the comparison between the EU and its new member states represented by the region of Central and Eastern Europe, and also examines the factors that have been influencing Private Equity development in the last four years and their mutual interdependencies. In the third part, the original valuation model measuring total returns of Private Equity investments is developed. In his dissertation, the author tests the following hypotheses: 1. Private Equity can be considered as one of the most risky investments among all. Total return from PE is well above the average of any other forms of investment. 2. The total amount of Private Equity investments in CEE region is growing steadily. The largest part of this investment is constituted by Buy-outs. Both tested hypotheses are confirmed. This doctoral thesis of Patrik Cupak provides a detailed analysis of Private Equity investments development. The main contribution of the dissertation is the fact that it represents the first analysis comparing the actual situation in Private Equity investments in European and CEE region of this type. The thesis also has significant theoretical and practical contributions due to its wide content and original analysis in this field. Its findings can be thus used in both, practice as well as the academic field.