Private Equity: Scale and Scope

1 Pages Posted: 25 Jul 2022 Last revised: 17 Nov 2022

See all articles by Wayne Lim

Wayne Lim

University of Oxford; Harvard University

Date Written: July 19, 2022

Abstract

I access proprietary data on 2,901 private equity firms to address two questions: what determines fund openings (scoping), and do fund openings adversely affect private equity firms’ performance? First, I find that firms that are larger (prior scale) or manage more fund types (prior scope) are inclined to open new funds and do so more quickly. Second, I find no evidence that performance declines when firms open new funds. In some instances, performance even improves. These results suggest that when firms grow in scope, the benefits of institutional learning outweigh the organizational costs, supporting the hypothesis of value creation over empire building.

Keywords: private markets, private capital, alternative investments, private equity, returns, performance, industrial organizations, scale, scope

JEL Classification: G1, G2, G3, L1, L2

Suggested Citation

Lim, Wayne, Private Equity: Scale and Scope (July 19, 2022). Available at SSRN: https://ssrn.com/abstract=4167260 or http://dx.doi.org/10.2139/ssrn.4167260

Wayne Lim (Contact Author)

University of Oxford ( email )

Harvard University ( email )

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