Private Equity Performance: What Do We Know?
Robert S. Harris
University of Virginia - Darden School of Business
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Steven N. Kaplan
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
April 2, 2013
Fama-Miller Working Paper
Chicago Booth Research Paper No. 11-44
Darden Business School Working Paper No. 1932316
We present evidence on the performance of nearly 1400 U.S. private equity (buyout and venture capital) funds using a new research-quality dataset from Burgiss, sourced from over 200 institutional investors. Using detailed cash-flow data, we compare buyout and venture capital returns to the returns produced by public markets. We find better buyout fund performance than has previously been documented. Average U.S. buyout fund performance has exceeded that of public markets for most vintages for a long period of time. The outperformance versus the S&P 500 averages 20% to 27% over the life of the fund and more than 3% per year. Average U.S. venture capital funds, on the other hand, outperformed public equities in the 1990s, but have underperformed public equities in the 2000s. Our conclusions are robust to various controls for risk. We also compare the Burgiss evidence to that derived from other commercial datasets. Private equity performance in Cambridge Associates and Preqin is qualitatively similar to the performance in the Burgiss data. Consistent with Stucke’s (2011) finding of a downward bias, buyout performance is markedly lower in the Venture Economics data.
Number of Pages in PDF File: 41
Keywords: Private Equity, Venture Capital
JEL Classification: G2, G11working papers series
Date posted: September 23, 2011 ; Last revised: April 3, 2013
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