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Which of the following is least likely a similarity between buyout funds and venture capital funds?
- A. They both seek to only acquire a minority stake in the firms they invest
in. - B. They both make investments with finite investment horizon (usually 3 to
5 years). - C. They both often take control of the board of the companies in which they
invest.
- A. They both seek to only acquire a minority stake in the firms they invest
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The correct answer is A.
Similar to buyout funds, venture capital funds typically have finite investment horizons (usually 3 to 5 years). Also, they both take control of the board of the companies in which they invest.
However, buyout funds almost always buy 100% of a company, whereas venture capital firms only acquire a minority stake – less than 50%. Therefore, option A is the least likely answer.
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