Determinants and effects of Venture Capital and Private Equity ...

equity is 9 per cent; the median added value per employee is 51 thousands of Euros. In terms of
financing the sample shows a high grade of leverage (defined as the ratio of debt over the sum
of debt and equity) mainly related to short‐term debt (defined as the sum of commercial and
bank debt due within 12 months).
Panel B reports statistics for backed firms. For each variable a star indicates whether the
difference between the mean of the control sample and that of the backed firms is significant
at the level of 5%. The first thing to note is that backed firms are generally younger (18 years).
As regards size, in this case firms tend to be bigger. The median firm exhibits higher sales, total
assets and number of employees, respectively 13,2 millions 11,9 millions and 61 employees.
This is in contrast with the suggestions of theory and empirical evidence relative to the United
States. Coupling this results with the ones reported in the second column, which reports the
mean, it can be argued there are few big firms which strive upwards the averages. Indeed,
worth nothing is the fact that in the backed‐sample there is a wider dispersion – as measured
by the difference between the 99 th and 1 th percentile – of the variables that proxy for size. As
for profitability ROE and Value Added per employee show better performance though for the
former the difference is not statistically significant. Intangibles are sensibly higher; assuming
intangibles can proxy for innovation this result may strengthen the intuition that backed firms
tend to be more innovative than others. To notice, also, the lower level of leverage which is
statistically significant: both in terms of overall level and short‐term, the median firm relies less
on debt. Trade credit, which is a variable of interest when investigating for the certification
effect, lasts longer for backed firms. This is consistent with the intuition pursued by Petersen
and Rajan (1997) who find that small firms which don’t have broad access to credit from
financial institutions exploit much more trade credit, meanwhile firms with better access to
credit offer more trade credit. In confirmation of this aspect, debt service applied to backed
firms is sensibly higher than the one applied to others, indicating increasing interests for the
formers.
Panel C and D switch the attention to the large firms sub‐group of the sample. The
comparison indicates that backed‐companies are younger and bigger in size, following the
results showed in previous panels. Moreover, they show better results in terms of
performance, though ROE is again not significant; intangibles are still higher giving hints for a
stronger innovative attitude. Contrary to the evidence for smaller firms, large backed‐firms are
more indebted than those in the control group. Short‐term debt represents the most important
source of financing for both the groups since the difference is not significant. Worth a mention
is the fact that both backed‐subgroups grow less in terms of variation of sales, while the better
level of marginality is reassuring
Summing up the descriptive analysis shows that backed firms are younger, grow less, have a
larger share of intangibles and lower profits. For larger firms another difference with respect to
the control sample is the higher level of indebtness.
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