56 Pages Posted: 12 Dec 2010
Date Written: December 9, 2010
We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and their investors (limited partners), and how/whether these contractual designs affect outcomes. Findings highlight the importance of private ownership, and information asymmetry and illiquidity associated with it, as a key explanatory factor of what makes private equity different from other asset classes.
Keywords: Private Equity, Venture Capital, Buyouts, Alternative Assets
JEL Classification: G2, G3, G24, G32, G34
Suggested Citation: Suggested Citation
Metrick, Andrew and Yasuda, Ayako, Venture Capital and Other Private Equity: A Survey (December 9, 2010). Available at SSRN: https://ssrn.com/abstract=1723882 or http://dx.doi.org/10.2139/ssrn.1723882
By Josh Lerner