As first step i would like to get help formulating the research proposal. This should be a document of between 3-5 pages. Below I have outlined the initial draft proposal which I discussed with my professor, and to which he principally agreed.
The Austrian private Equity is underdeveloped – what are the driving forces behind that – and how can it be developed further.
In various literature and empirical studies Austria is ranked low on capital market
development. A study on capital market
development and comparable European benchmark, conducted by the Vienna Stock exchange has confirmed this. The development of the private equity industry seems to be a victim of this situation. However opinions expressed from Capital market
experts, and members of the private equity community in Austria, also suggest a potential cultural barrier towards private equity. This, it is claimed, is particular outspoken among Small/medium seized private enterprises.
Given the importance of SME for the Austrian economy, it is crucial to have a well functioning capital market
that gives businesses choices when it comes to capital
raising and funding growth.
The financial crises has clearly demonstrated what happens when the market
is too dependent on one source of capital
namely banks. Private Equity should be a natural alternative capital
provider to Banks and the stock exchange, but this is not really the case.
I work in the private equity industry in Austria. I see and feel the impact of this situation every day. A huge number of these SME businesses face a generational issue within the foreseeable future. The change in ownership, when not within the family, could be arranged as Management Buy Out (MBO) Management Buy In (MBI) or trade sale. Private equity should be a relevant candidate as finance/equity partner for either option.
It is my motivation to try and understand more clearly what the drivers are, and what can potentially be done to improve the environment and development of the private equity industry in Austria. I will also focus my attention to the Small and medium Seized enterprises (none listed) because I think, given the situation outlined above, that this is the most interesting target group for Austrian based private equity groups.
Suggested Methodical approach
• Empirical study of the capital market
development in Austria, its key players and their dominance of the financial industry.
• Empirical study of the private equity industry in Austria, its key players and their role in the Austrian capital market
. International comparison and benchmark.
• Literature/Overview of the SME structure in Austria. Who are they and what the typical ownership structure is.
• Qualitative study (Fragebogen) of a select representative group of CEO/CFO & Company Owners. Minimum 20 Interviews. The individuals will be selected in order to secure opinions from professionals (industry players) large (+100m) and mid and small seized company representatives.
• My aim is to get answers and insight on the following broad group of questions
o Economic activity and outlook (growth plans)
o Their view of the Austrian capital market
and its influence on their business.
o Investor protection & corporate governance.
o Human and social environment.
o Entrepreneurial culture and opportunities.
o How do they traditionally finance the business and why.
o Has the current recession impacted their view on their business and their relationship to their capital
o Their view and understanding of private Equity.
o Their potential barriers to private equity.
o What can the private equity industry do to position itself as a relevant alternative to Banks?
The questions are not comprehensive and will be further developed!!
Based on the empirical analyses of the capital market
, the understanding of the private equity industry and it players, I will be able to prove my first hypothesis, that the private Equity market
in Austria is underdeveloped. I will also prove that this is the case based on International benchmarks.
I will prove that the SME segment is important to the Austrian economy. I will document how the typical ownership structure is, and how that could potentially influence the attitude towards the capital market
, especially Private equity.
Based on my qualitative study (interviews) I will be able to link empirical evidence to current sentiment/opinions and answer my question “what are the drivers and how can private equity be developed further.
There are faxes for this order.
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