This study provides evidence of significant biases in multi-year management forecasts by analyzing a proprietary dataset on venture-backed start-ups in Germany. We find that revenues and expenses are highly overestimated in each of the investigated one- to five-year-ahead planning periods....

Our study provides new evidence on due diligence (DD) and its impact on investee performance. We estimate the economic value of due diligence (DD) in the context of private equity (PE) by investigating the relationship between DD and investee performance, while controlling for endogeneity. With...

The importance of private fund investor due diligence in the investment allocation process, in capital formation, and in private fund litigation has reached unprecedented levels and is further increasing. To provide the industry with data, data trend analyses, and guidance on applicable legal...

We estimate the economic value of due diligence (DD) in the context of private equity by investigating the relationship between DD and investee performance, while controlling for endogeneity. With the adoption of a novel dataset, we find evidence highly consistent with the view that a thorough...

We examine the value added by venture capital investors during the due-diligence process. We use data from a seed fund that quasi-randomly assigns applicants to due diligence, creating a natural experiment. We find that due-diligence assignment leads to higher average growth, even for companies...

The working paper examines the role and development of the Central and Eastern European venture capital sector in the five years between 2016 and 2020. This period includes both the end of the recovery after the economic crisis in 2008 and the downturn due to the coronavirus crisis in 2019. A...

Risk is a big concern for anyone contemplating investing in new, especially innovative ventures. However, if successful, the returns can be extraordinary, serving as an impetus for many venture capitalists to provide greater funding. Still, many new ventures never see the end of the tunnel, and...

The pre-investment due diligence is a comprehensive systematic investigation, verification and evaluation of the prospective project before funds are committed. The paper aims to develop a comprehensive due diligence and audit framework to facilitate consistent evaluation of investment...