The Economics of Private Equity: A Critical Review

51 Pages Posted: 15 Feb 2024 Last revised: 6 Dec 2024

See all articles by Alexander Ljungqvist

Alexander Ljungqvist

Centre for Economic Policy Research (CEPR); Swedish House of Finance; European Corporate Governance Institute (ECGI)

Date Written: February 12, 2024

Abstract

Over the past half century, private equity has grown into a $3 trillion asset class. In this review, I critically synthesize the main insights of the academic literature on private equity, with a special focus on the performance of private equity as an asset class and its track record of value creation. I also review key aspects of investing in private equity that are of relevance and concern to investors when forming and managing a portfolio of private equity funds.

Keywords: Private equity, value creation, investor returns

JEL Classification: G23, G24, G32, G11

Suggested Citation

Ljungqvist, Alexander and Ljungqvist, Alexander, The Economics of Private Equity: A Critical Review (February 12, 2024). Swedish House of Finance Research Paper No. 24-07, Available at SSRN: https://ssrn.com/abstract=4723171 or http://dx.doi.org/10.2139/ssrn.4723171

Alexander Ljungqvist (Contact Author)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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