How Persistent is Private Equity Performance? Evidence from Deal-Level Data
42 Pages Posted: 23 Aug 2013 Last revised: 23 Jan 2018
Date Written: December 21, 2015
The persistence of returns is a critical issue for investors in their choice of private equity managers. In this paper we analyse buyout performance persistence in new ways, using a unique database containing cash-flow data on 13,523 portfolio company investments by 865 buyout funds. We focus on unique realized deals and find that persistence of fund managers has substantially declined as the private equity sector has matured and become more competitive. Private equity has, therefore, largely conformed to the pattern found in most other asset classes in which past performance is a poor predictor of the future.
Keywords: private equity, returns, persistence, portfolio companies
JEL Classification: G11, G20
Suggested Citation: Suggested Citation