Management Buy-outs and Venture Capital
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Management Buy-outs and Venture Capital

Into the Next Millennium

Edited by Mike Wright and Ken Robbie

This book presents up-to-date evidence on the issues facing financiers and intermediaries involved in venture capital and management buy-outs. It provides a comprehensive review of existing literature and an analysis of international trends in market development as well as a global comparison of the major issues.
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Chapter 4: Venture capital in transition economies: the cases of Hungary, Poland and Slovakia

Judit Karsai, Mike Wright, Zbigniew Dudzinski and Jan Morovic


Page 81 4.  Venture capital in transition economies: the cases of Hungary, Poland and Slovakia Judit Karsai, Mike Wright, Zbigniew Dudzinski and Jan Morovic Introduction The countries of Central and Eastern Europe (CEE) are now deep into a long­term process of transition to a market economy. The creation of market oriented  enterprises is a crucial element of this transition and has been taking place both through the establishment of new businesses (Lane, 1995; Roman, 1991; Gibb, 1993)  and the privatisation of state­owned firms either through sales to other companies or to incumbent management and employees (Karsai and Wright, 1994). While these  developments have already led to a significant private sector throughout much of CEE, a number of major problems need to be addressed before transition to a fully  functioning market economy is achieved (Grosfeld and Hare, 1991). The development of entrepreneurship was severely constrained under the regimes in existence  prior to 1989 and although there has been extensive creation of new businesses since then, considerable progress still needs to be made in the development of  entrepreneurial skills (Filatotchev et al., 1996b). Similarly, although much of the state­owned enterprise sector has been transferred to the private sector, major  problems remain in converting them into commercially viable enterprises, not least because of problems with the age and vintage of productive capacity and the level of  managers’ commercial skills.  Developing a successful private sector also faces two further major problems. The first concerns access to finance. Roman (1991) in a...

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