Sophie Manigart

• Ph.D. In Business
• Head of Department at Vlerick Business School

Research Summary This study reviews four decades of fragmented and contradictory empirical literature on the real effects of private equity (PE) buyouts on portfolio companies, differentiating between efficiency and growth outcomes. We hypothesize how institutional forces, including regulatory, cognitive, and normative institutions explain heteroge...

Research Summary Private equity (PE) investors invest in a portfolio of firms, setting new, ambitious performance aspirations and providing monitoring and value‐adding services to help management attain these aspirations. Integrating a behavioral theory of the firm and corporate governance perspective, this study investigates how portfolio firms re...

While the academic literature on entrepreneurial finance has expanded exponentially, many gaps in our knowledge remain. This is driven by digitalization impacting the development of new investment types such as crowdfunding and ICO, the emergence of new investors based upon digital technologies, and the functioning of existing investors. Next, the...

This paper explores how contracts in private equity-backed buyouts shape corporate governance in portfolio companies. Drawing upon agency theory and incomplete contracting theory, 50 actual contracts are analyzed in detail. Contracts focus on reducing adverse selection risks through limiting pre-investment information asymmetries and aligning the g...

This paper examines net-of-fees private debt fund performance, performance persistence across funds managed by the same general partner and a general partner’s ability to time the market. We document that private debt funds outperform bond and equity market benchmarks in the cross-section, with high performance dispersion across strategies and perf...

We investigate how information flows within bank networks facilitate syndicate formation and lending in the leveraged buyout (LBO) market, where relationships between banks and borrowers are scarce and borrower opacity is high. Using novel measures that characterize a bank's ability to source and disseminate information within its loan syndication...

p>Private equity (PE) investors enhance the governance of portfolio companies by installing high-powered boards, structuring the senior management team, installing reward and performance management systems, and advising the portfolio company. The aim is to reduce agency risks and to increase shareholder value. A growing body of literature investiga...

Digitization creates new financial channels that complement traditional intermediaries, but may raise concerns over fraud, cybersecurity, or bubbles. Artificial intelligence and machine learning change the way in which traditional investors work. This special issue focuses on economic, cultural, and regulatory determinants of fintech development, a...

This study examines the impact of horizontal acquisition announcements on the value of direct competitors of the combined entity. We argue that the ownership structure of the target drives competitor wealth effects. First, the stronger disciplining force of the market for corporate control for public firms compared to private firms will lead to hig...

The positive effect of venture capital (VC) on firm growth has been widely documented. However, there exists a large variation in growth of VC-backed firms, with only a small number reaching a substantial size. Prior studies have linked the variation in growth of VC-backed firms to differences in resource endowments of the entrepreneurial top manag...

Crowdfunding research has grown exponentially since the first academic papers in the field were published in 2013. This interpretivist study attempts to explain why academics worldwide have chosen to study crowdfunding. As no explicit theories currently exist to guide our research, we have relied on schooling and management fashion theories. Based...

Crowdfunding has become an alternative source of financing for entrepreneurial new ventures and social projects. While several studies have analysed the success factors of crowdfunding campaigns, and identifying and “tapping the right crowd” has been shown crucial in this respect, we still lack a basic understanding of the individuals who are in th...

Past research has shown that new firms can facilitate resource mobilization by signaling their unobservable quality to prospective resource providers. However, we know less about situations in which firms convey multiple signals of different strengths—that is, signals that are more- or less-correlated with unobservable firm quality. Building on a s...

Venture capital (VC) is a subset of private equity and refers to investments made for the launch, early growth or expansion of companies. VC firms are financial market intermediaries, specializing in the management of information asymmetries and high levels of uncertainty. This chapter reviews three major research streams that are identified in the...

After the successful ENTFIN conferences in Lyon (2016), Ghent (2017), and Milan (2018), the ENT FIN Association and the FGF e. V. will organize the fourth conference on Entrepreneurial Finance in the historical city of Trier, Germany on July 2-3, 2019. Authors interested in presenting their paper at the conference should submit the full paper in a...

Research on venture capital internationalization (VC) has expanded rapidly over the last decade. This paper reviews the extant literature on VC internationalization and highlights gaps in our knowledge. We identify three major research streams within this literature, which revolve around the following questions: (1) which VC firms invest across bor...

Governments around the world have set up fund-of-fund programs to increase the supply of venture capital financing to young growth-oriented firms. In these programs, a government fund-of-fund acts as limited partner in a venture capital fund. The venture capital investment process is hereby delegated to external investors, which were selected by th...

Using a resource dependence perspective, we theorize and show that non-venture-capital-backed ventures founded in U.S. states with a lower availability of venture capital (VC) are more likely to relocate to California (CA) or Massachusetts (MA)—the two VC-richest states—compared to ventures founded in states with a greater availability of VC. Moreo...

More and more family firms open their capital for outside investors, yet existing studies mainly conclude that family firms are more reluctant than nonfamily firms to hand over control to outside investors. In this study, we build on an organizational identification perspective to explore why family firms differ in their attitudes toward outside in...

provides a snapshot of the trends and challenges involved in young, high-potential ventures in Belgium. Our insights are based on data gathered from 170 young, high-potential Belgian ventures with 370 founders in a wide cross-section of industries. For a more detailed understanding, we have –where relevant– split up our results for high- versus low...

This research increases understanding of agency theory by exploring the influence of divergent principal interests in private firms. Investigating unique panel data on employment levels and employment terms in private equity backed family firms (from 1996 to 2013), findings reveal that, when private equity investors acquire minority positions, fami...

1. INTRODUCTION - STUDY AIMS AND SCOPE This document contains the Final Report in respect of the study "Assessing the Potential for EU Investment in Venture Capital and Other Risk Capital Funds-of-Funds”2. The assignment was carried out by the Centre for Strategy & Evaluation Services (“CSES”) and Oxford Research, supported by Panteia and New Front...

Three distinct fields of gene manipulated biotechnology have so far been economically exploited: medical biotechnology, plant biotechnology and industrial biotechnology. This article analyzes the economic evolution and its drivers in the three fields over the past decades, highlighting strong divergences. Product and market characteristics, affecti...

This paper examines how angel investors’ human capital affects the valuation of their portfolio companies, based on the pre-money valuation of 123 investment rounds in 58 Belgian companies. We argue that angel investors with higher levels of human capital will perceive a higher valuecreating potential in entrepreneurial opportunities through their...

Drawing on resource dependence theory and the relocation literature, we study whether ventures founded in states with low availability of venture capital (VC) relocate their activities to alleviate the constraints of their initial location. We further study the effectiveness of relocation towards California and Massachusetts as a tactic to attract...

Manuscript Type Empirical Research Question/Issue We first study how cross‐country differences in shareholder protection against self‐dealing and personal bankruptcy laws affect the financing of new technology‐based firms ( NTBFs ). Second, we study how venture capital ( VC ) investors – as expert monitors and initiators of “good” governance pract...

Drawing upon an escalation of commitment framework, this study investigates how differences between cross-border and domestic venture capital investors in access to information, social and structural factors affect their decision to terminate an unsuccessful investment. We track the exit outcome of 1060 venture capital investments in 684 European t...

This study investigates the wealth effects of 182 European horizontal acquisitions in the manufacturing industry on rivals of the merging firms, thereby distinguishing between acquisitions of public, private and subsidiary targets. Based on a case-by-case investigation of the European Commission, over 800 publicly-listed rivals were identified. The...

Drawing upon signaling theory and the attention-based view of the firm, we study if signal receivers attend differently to different types of signals when they interact with different firms or operate under different market conditions. Our theorizing and empirical analysis is situated in the context of the follow-on fundraising activities by privat...

Up to now, little attention has been paid to the continuity of a firm when entrepreneurs exit. Survey data from 175 entrepreneurs confirm the theory of planned behavior as an appropriate framework to understand whether entrepreneurs, when leaving, sell or liquidate their firm. Entrepreneurs' sale attitudes are related to sale intentions, which are...

This paper studies how the presence of cross-border as opposed to domestic venture capital investors is associated with the growth of portfolio companies. For this purpose, we use a longitudinal research design and track sales, total assets and payroll expenses in 761 European technology companies from the year of initial venture capital investment...

This chapter introduces venture capital, which is a subset of the private equity asset class that focuses on investments in new or growing privately held companies with high growth potential. It specifically addresses why venture capital investors exist beside traditional financial intermediaries such as banks; what the different venture capital mo...

The scope and purpose of this special issue is to reassess the relationships between private equity (PE) investors and their portfolio companies in the light of the need for venture capital/ private equity (VC/PE) firms to adapt their strategies for value creation in the light of the recent financial crisis. We particularly focus upon VC/PE charact...

This paper studies the role of entrepreneurs in investment tie formation in science-based entrepreneurial firms. Specifically, we address why investment tie formation is path-dependent for some firms, but more amenable to intentional management for others. Using longitudinal case studies, our evidence suggests that early investment tie formation is...

The principal goal of this monograph is to provide an overview of relevant aspects and research findings pertaining to the period after the venture capital firm (also known as venture capitalist or VC) has made the decision to invest in a particular portfolio company (or entrepreneur). Drawing principally upon refereed journal papers in entrepreneu...

This paper examines the effect of different types of international knowledge accumulation on the internationalization of venture capital firms, as a particular type of professional service firms. We distinguish between experiential knowledge acquired through previous activities, inherited knowledge through the management team and external knowledge...

This study investigates the wealth effects of 182 European horizontal acquisitions in the manufacturing industry on rivals of the merging firms, thereby distinguishing between acquisitions of public, private and subsidiary targets. Based on a case-by-case investigation of the European Commission over 800 publicly-listed rivals were indentified. The...

This paper studies the association between bootstrapping and startup growth. Bootstrapping reduces a startup’s dependence on financial investors, but may create new dependencies. Drawing upon resource dependence theory, we hypothesize that when bootstrapping does not create new strong dependencies it will benefit startup growth, especially when dep...

This paper studies the role of venture capital (VC) financing in the financing decisions and capital structure of private entrepreneurial companies. First, we find that VC companies raise more external capital compared to non VC companies. Second, conditional on the decision to issue external financing, we find that VC companies raise more equity r...

Building upon prior research that demonstrates how the limited knowledge of finance alternatives of entrepreneurs may cause suboptimal finance decisions, this paper examines how entrepreneurs’ human and social capital influence their knowledge of finance alternatives. For this purpose, we use survey data from 103 Belgian start-ups. Results demonstr...

This paper analyses the duration of the time to exit of distressed firms, differentiating between court driven exits (mainly bankruptcies) and voluntary liquidations. It examines how long firms survive after initial signs of economic distress. The study is conducted on an extensive dataset of 5,233 Belgian distress-related exits of mature firms, th...

This paper examines firm-level determinants of mature firm exits after economic distress. Using nested logit models and a sample of 6,118 distress-related exits in Belgium, we analyze the type of exit that distressed firms experience. We show that 41% of the firms in our sample exit through a court driven exit procedure (mainly bankruptcy), 44% are...

High growth entrepreneurial companies need external financial resources as their internally generated cash flows are typically smaller than their investment opportunities, but they may be faced with finance constraints due to market imperfections, such as asymmetric information and transaction costs. We empirically investigate the different sources...

We analyze the post-acquisition performance of 384 unquoted entrepreneurial firms that have been acquired between 2000 and 2004, and compare it with 875 comparable, but independent entrepreneurial firms. Target firms in domestic acquisitions are less profitably and grow less than independent firms, both before and after the acquisition. Target firm...

This paper studies how cross-border venture capital investors as opposed to domestic venture capital investors influence the development of their portfolio companies. For this purpose, we use a longitudinal research design and track sales from the year of initial venture capital investment up to seven years after this investment in 692 European tec...

This study explores the impact of bargaining power of venture capital (VC) firms on the valuation of their portfolio companies. We argue that VC firm types with greater bargaining power vis-à-vis the entrepreneur negotiate lower valuations compared to VC firm types with less bargaining power. We find that VC firm types with stronger bargaining powe...

By combining insights from relational network theory and agency theory we identify the boundary conditions to the embeddedness approach to partner selection decisions in interfirm collaborations. Employing a longitudinal dataset comprising the investment syndicates for the population of UK management buyouts between 1993 and 2003, we find that rela...

This paper examines incremental financing decisions within high-growth businesses. A large longitudinal dataset, free of survivorship bias, to cover financing events of high-growth businesses for up to 8years is analyzed. The empirical evidence shows that profitable businesses prefer to finance investments with retained earnings, even if they have...

While bootstrap finance is widely used in entrepreneurial ventures, both scholars and practitioners have presented conflicting views on the relation between financial bootstrapping and venture growth. This paper empirically investigates the association between bootstrap strategies used at startup and subsequent venture growth. For this purpose, we...

The Theory of Planned Behavior (TPB) is used in this paper to empirically study whether an entrepreneur transfers his/her firm, conditional on exiting the firm. TPB posits that entrepreneurial intentions drive actions, being the transfer of a business. The TPB framework is expanded by assessing whether formal and informal planning of the exit proce...

Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn...

We evaluate whether government intervention through the subsidization of business angel networks enhances regional economic growth. We show that, firstly, BANs reduce the information and financing problems entrepreneurial companies face. Secondly, these companies contribute to economic development and growth. Thirdly, there are positive indicators...

This study explores the impact of venture capital (VC) characteristics on the value of their portfolio companies in investment rounds. Based upon a unique hand-collected sample of 362 investment rounds in 180 VC backed firms, we show that university VC firms and government VC firms value firms lower compared to independent VC firms. Further, while...

While bootstrap strategies are widely used in entrepreneurial ventures, both scholars and practitioners have presented conflicting views on the relation between these strategies and venture development. This paper empirically investigates the impact of bootstrap strategies used at startup on venture development. For this purpose, we use a longitudi...

This paper studies the international investment behavior of private equity (PE) firms. Perspectives from international service management are integrated with human capital and network theory to test the value of international human capital and international network relationships. Using a sample of 110 private equity firms from five European countri...

Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the...

This paper examines the relation between private equity (PE) investors' involvement and their portfolio firms' earnings quality. We operationalize earnings quality through comparative analyses of conditional loss recognition timeliness. For a sample of unlisted Belgian firms, we find that PE involvement increases a firm's willingness to recognize l...

Over the 15 past years, international PE flows have become increasingly important. The goal of this chapter is to present evidence and academic research on this topic and to stress how the international spread of capital affected the overall development of the PE industry. Specifically, we will first show how internationalization affected PE flows...

This paper researches the determinants of financing decisions of extreme growth companies. For this purpose, we use a longitudinal dataset, free of survivorship bias, covering the financing events of extreme growth companies for up to eight years. Results are generally consistent with the extended pecking order theory. Profitable companies are more...

The private equity (PE) industry is more internationally oriented than ever before with a growing number of cross-border buyouts. This raises the question whether international investors differ from local ones and to which extent the origin of the PE firm influences the exit pattern of their PE backed companies. In order to exit, PE firms have to s...

This paper examines how entrepreneurs’ human and social capital influence their knowledge of finance alternatives. For this purpose, we use survey data from 125 Belgian start-ups. Results demonstrate that entrepreneurs with a business education and entrepreneurs with experience in accountancy or finance have a broader knowledge of finance alternati...

This paper investigates how angel investors’ human capital affects the valuation of their portfolio companies at initial investment, based on the pre-money valuation of 59 investments in young Belgian companies. We show that entrepreneurs are able to negotiate higher valuations with angel investors who have a business degree, more entrepreneurial e...

In the current study, we dynamically analyze unlisted firms' voluntary disclosure decisions around private equity (PE) participation. First, we disentangle the role of disclosure in attracting PE investments. In addition, we examine the extent to which a firm's disclosure policy is affected by the changing corporate setting and intensified corporat...

This chapter reviews the literature on the impact of venture capital investments on economic growth, primarily at the firm level. We focus on new insights gained in the 1990s and on North American and European practices. We examine the impact of formal venture capitalists (VCs) on growth and thus exclude informal or private investors (PIs). It shou...

I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.

This chapter analyzes the role played by the ten national EU governments in the development of local venture capital (VC) markets in their respective countries in the period between 1989 and 2003. Multivariate analyses show that direct public investments in the VC industry are not related to the overall economic climate, and are negatively related...

This paper analyses the impact of the change in ownership after a management buyout on both post-buyout efficiency and growth. We contrast family firm buyouts with divisional buyouts, and private equity (PE) financed buyouts with non-PE financed buyouts. We analyse the four-year post-buyout growth and efficiency of 167 Belgian companies (of which 4...

This paper researches the determinants of incremental financing decisions made by high growth companies. For this purpose, we use a longitudinal dataset, free of survivorship bias, covering the financing events of high growth companies for up to eight years. Results are generally consistent with the extended pecking order theory controlling for con...

In this paper we evaluate whether government intervention through the public funding of business angel networks is warranted. Based on a regional study of four BANs, we find that these subsidies reach their goals in terms of contribution to economic development and reducing financing and information problems entrepreneurial companies face. However,...

Dit artikel heeft als doel na te gaan hoe ondernemingen zich na een buy-out verder ontwikkelen. We baseren ons hiervoor op 288 Belgische buy-outs en analyseren de groei, de ontwikkeling van het werknemersbestand en de operationele rentabiliteit. We maken hierbij een onderscheid tussen ondernemingen waarbij de buy-out gefi nancierd werd zonder of me...

We examine the neglected area of internationalisation by VCs. Using a representative sample of 195 VCs, we show that the decision of a European VC firm to invest internationally is driven by its human resources. Having more VC executives in general and more VC executives with previous international experience in specific, results in a higher probab...

We empirically show on a sample of 270 unquoted, private equity backed companies that the shareholder structure of private companies impacts the quality of their publicly available accounting information. More precisely, companies in which private equity (PE) investors have a high equity stake produce lower quality accounting information than compa...

There is a vast academic literature that shows that company performance and value improves after a buy-out (BO). This is explained by the use of significant leverage, lower agency problems and tighter governance of private equity (PE) investors enhancing efficiency. Further, a renewed entrepreneurial climate spurs growth and innovation. This paper...

While informed private equity (PE) investors screen for the most promising ventures, firms may avoid raising of PE for issues of cost and control. A critical question therefore is: which firms get PE? We consider both supply and demande side arguments to study the characteristics of a sample of 231 firms that did receive PE and compare them to thos...