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Academy of Entrepreneurial Finance (AEF), Montrose, CA >
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http://hdl.handle.net/10419/55976
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| Title: | | A simple utility approach to private equity sales  |
| Authors: | | Dubil, Robert |
| Issue Date: | | 2003 |
| Citation: | | [Journal:] Journal of Entrepreneurial Finance, JEF [ISSN:] 1551-9570 [Volume:] 8 [Year:] 2003 [Issue:] 1 [Pages:] 1-8 |
| Abstract: | | The paper examines the liquidity risk of a private equity firm that decides to dispose of a large holding in its portfolio. As the sale takes time, it requires a careful balancing act of the exposure to the fluctuations in the market value of the investment against the large sale-induced price depression. A mean-standard deviation utility framework is an appealing decision tool for optimizing protracted asset dispositions. The firm maximizes the expected profit from the sale strategy net of the price concession minus a penalty function for exposure to the price risk, with the penalty weight related to a loss confidence interval. |
| Document Type: | | Article |
| Appears in Collections: | | Journal of Entrepreneurial Finance
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