Private Equity Centrality and Club Deal Formation: Evidence from a Social Network Analysis - Subsample Analysis and Social Network Analysis in the Nordic Countries

Abstract: In this paper, we investigate the structure of the network of relationships established between private equity firms when they form acquisition consortiums. We collected information on 1562 private equity transactions, including both sole-sponsored and club deals, across the period 2000-2017. We analyse the consortiums within a social network framework, investigating the prominence and centrality of private equity firms inside the network. In particular, we performed two subsample analysis for the likelihood of consortium formation. In the first one we tested our model in the two subsamples of Public to Private transactions and Private to Private ones, while in the second one we tested our model across different quartiles of Deal Size transactions. Furthermore, we performed a third subsample analysis which aim to analyse, from a social network point o view, the structure of relationships existing between private equity firms when they form acquisition consortium, in the Nordic countries. The results we got from these subsample analyses were in line to the findings of the main research paper and increased their robustness. In particular, we were able to confirm the "information and knowledge sharing" motivation, in addition to the financial motivation, already tested in the literature. We also found that our model which aim to predict the conditional probability of consortium formation works better in the context of Private to Private and small (first and second quartile) transactions.