Abstract
In the maturing private equity industry, investments where the private equity fund owns a minority of the equity are gaining influence. They use different instruments for value creation than classic majority investments and involve other mechanisms of decision making. Therefore, understanding value creation in minority investments on a deal level is important. We find that overall returns of minority investments are below those of majority investments. Minority investments thus appear to offer a different type of risk–return relationship to broaden diversification for both general and limited partners.
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