Private Equity Performance: A Survey

Posted: 11 Dec 2015

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); University of Chicago - Polsky Center for Entrepreneurship

Berk A. Sensoy

Vanderbilt University - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: December 2015

Abstract

We survey the literature on private equity performance, focusing on venture capital and buyout funds rather than on portfolio companies. We describe recent findings on performance measures, average fund returns, risk adjustments, cyclicality and liquidity, persistence, interim returns and self-reported net asset values, the performance of different types of investors in funds, and the links between management contracts and fund returns. Buyout funds have outperformed the S&P 500 net of fees on average by approximately 20% over the life of the fund. Venture capital funds raised in the 1990s outperformed the S&P 500, whereas those raised in the 2000s underperformed. The results are consistent across a number of data sets and papers. Before the 2000s, buyout and venture capital fund performance showed strong evidence of persistence. Since 2000, buyout fund persistence has declined, whereas venture capital fund persistence has remained equally strong.

Suggested Citation

Kaplan, Steven Neil and Sensoy, Berk A., Private Equity Performance: A Survey (December 2015). Annual Review of Financial Economics, Vol. 7, pp. 597-614, 2015, Available at SSRN: https://ssrn.com/abstract=2702343 or http://dx.doi.org/10.1146/annurev-financial-111914-041858

Steven Neil Kaplan (Contact Author)

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University of Chicago - Polsky Center for Entrepreneurship

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Berk A. Sensoy

Vanderbilt University - Finance ( email )

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