Interim Fund Performance and Fundraising in Private Equity

60 Pages Posted: 23 Nov 2013 Last revised: 4 Jul 2016

Brad M. Barber

University of California, Davis

Ayako Yasuda

University of California, Davis - Graduate School of Management

Date Written: July 2, 2016

Abstract

General partners (GPs) in private equity (PE) report the performance of an existing fund while raising capital for a follow-on fund. Interim performance has large effects on fundraising outcomes; the impact is greatest when backed by exits and for low reputation GPs. Faced with these incentives, GPs time their fundraising to coincide with periods of peak performance through two strategies: “exit and fundraise” and “NAV management.” Consistent with the former, performance peaks are greatest for funds with high realization rates. Consistent with the latter, low reputation GPs with low realization rates also experience performance peaks and erosions in performance post fundraising.

Keywords: private equity, venture capital, buyouts, fundraising, fund evaluation, fund returns, institutional investors

JEL Classification: G10, G20, G24, G28, G29

Suggested Citation

Barber, Brad M. and Yasuda, Ayako, Interim Fund Performance and Fundraising in Private Equity (July 2, 2016). Available at SSRN: https://ssrn.com/abstract=2357570 or http://dx.doi.org/10.2139/ssrn.2357570

Brad M. Barber

University of California, Davis ( email )

Graduate School of Management
One Shields Avenue
Davis, CA 95616
United States
530-752-0512 (Phone)
530-752-2924 (Fax)

Ayako Yasuda (Contact Author)

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

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