Abstract

http://ssrn.com/abstract=996334
 
 

References (43)



 
 

Citations (85)



 


 



The Economics of Private Equity Funds


Andrew Metrick


Yale School of Management; National Bureau of Economic Research (NBER)

Ayako Yasuda


University of California, Davis - Graduate School of Management

June 9, 2009

Review of Financial Studies, Vol. 23, pp. 2303-2341
Swedish Institute for Financial Research Conference on The Economics of the Private Equity Market

Abstract:     
This paper analyzes the economics of the private equity industry using a novel model and dataset. We obtain data from a large investor in private equity funds, with detailed records on 238 funds raised between 1993 and 2006. We build a model to estimate the expected revenue to managers as a function of their investor contracts, and we test how this estimated revenue varies across the characteristics of our sample funds. Among our sample funds, about two-thirds of expected revenue comes from fixed-revenue components that are not sensitive to performance. We find sharp differences between venture capital (VC) and buyout (BO) funds. BO managers build on their prior experience by increasing the size of their funds faster than VC managers do. This leads to significantly higher revenue per partner and per professional in later BO funds. The results suggest that the BO business is more scalable than the VC business, and that past success has a differential impact on the terms of their future funds.

Number of Pages in PDF File: 57

Keywords: private equity, venture capital, fund managers

JEL Classification: G1, G2

Accepted Paper Series


Download This Paper

Date posted: June 27, 2007 ; Last revised: August 3, 2010

Suggested Citation

Metrick, Andrew and Yasuda, Ayako, The Economics of Private Equity Funds (June 9, 2009). Swedish Institute for Financial Research Conference on The Economics of the Private Equity Market; Review of Financial Studies, Vol. 23, pp. 2303-2341; Swedish Institute for Financial Research Conference on The Economics of the Private Equity Market. Available at SSRN: http://ssrn.com/abstract=996334

Contact Information

Andrew Metrick (Contact Author)
Yale School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
(203)-432-3069 (Phone)
HOME PAGE: http://mba.yale.edu/faculty/profiles/metrick.shtml

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ayako Yasuda
University of California, Davis - Graduate School of Management ( email )
One Shields Avenue
Davis, CA 95616
United States
530-752-0775 (Phone)
530-752-2924 (Fax)
HOME PAGE: http://www.ayakoyasuda.com
Feedback to SSRN


Paper statistics
Abstract Views: 46,446
Downloads: 13,054
Download Rank: 115
References:  43
Citations:  85
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.297 seconds