Marketing

Microeconomics

Operating system

Economics

Computer science

Mathematical optimization

Qualitative property

Club deal

Business

Private equity

Mathematics

Politics

Political science

Leveraged buyout

Finance

Equity (law)

Private equity firm

Investment (military)

Machine learning

Heuristics

Journal of Small Business Management

This study utilizes a multiple-case analysis to examine the decision-making processes surrounding buyout decisions of small-to-medium businesses. Qualitative data were generated from semistructured interviews at 20 private equity groups. Rather than relying on a retrospective review of prior decisions, we present decision-makers with teasers, a summary of an investment opportunity. Our results indicate that heuristics are utilized to guide selection and execution of buyout investments. We also uncover the role of affect: strong positive or negative responses to specific stimuli in the teasers. Furthermore, the use of heuristics has important implications in the sourcing of private equity for business owners.

Fast thinking in private equity: The role of heuristics in screening buyout opportunities