Private equity funds as possible source of capital for SMEs in transitional economies: case of Serbia

Analyzing current problems which a lot of entrepreneurs and small and medium enterprise managers encounter in Serbia, as well as in some neighboring countries in the region of Central and South-Eastern Europe, it has become obvious that limited approach to quality long-term sources of financing is the most worrying one. As small and medium enterprises, according to many parameters, represent the most dominant sector in terms of its share in GDP, total production, employment and creation of values, in this paper we have tried to look into the role that private equity funds (PEF) may have in their financing. Analyzing alternative sources of financing SMEs on the one hand and basic principles of the function of private equity funds on the other, we have tried to identify the most important advantages and disadvantages of this source of financing in order to draw conclusion in terms of possible impact that PEF may have on the development of a certain number of SMEs