Target acquisitiveness stands out as one of the primary drivers of all the key aspects of the market for corporate takeovers: acquisition announcement returns, probability of deal success, propensity to acquire and be acquired. Acquisitive targets, though a small proportion of the sample, are...

Almost exactly 30 years ago, a famous article by Michael Jensen in the Harvard Business Review predicted that private equity would “eclipse” the public corporation because it was a superior form of corporate ownership. Trends since 1989 seem to bear out Jensen's prediction. Much time and...

On December 13, 2013, two days after its IPO, Hilton hotels traded above $22 a share. This meant that the 2007 take-private transaction of Blackstone had produced the largest gain ever in private equity at about $10 billion. In addition, Hilton had become the largest hotel group in the world by...

Investors in private equity funds make payments for fund management fees and for fund investments; they receive capital which comes from the sale of these investments and that capital is net of carried interest. The carried interest is non-zero if the fund has returned sufficient capital back to...

This case study discusses the different approaches to asset allocation and some of the key issues that asset owners currently face. It covers the Yale model, the Canadian model, and more traditional approaches. The case is set up as a debate with a dense content; about the equivalent of three...

We estimate the demand for private equity fund stakes in the secondary market using a broker's proprietary data on bids. We show that the demand response to aggregate liquidity shocks is negatively related to contemporaneous bids, and this relationship is stronger for funds that most likely are...

Asset owners derive little benefit from the continuous trading of capital claims offered by public markets, and the number of listed companies is decreasing. However, private markets are not as efficient and delegating investment management in private markets is challenging due to inherently...

Consistent with mispricing explanations proposed in the literature to explain the value premium, the value premium is driven by stocks held by individual investors. Stocks held by institutional investors do not exhibit any significant value premium nor value effect while representing 93% of the...

We document the wide dispersion of private equity investment returns and examine performance determinants using a newly constructed database of 7,500 investments worldwide. One in ten investments does not return any money, whereas one in four has an IRR above 50%. Quick flips are associated with...

This appendix provides derivations and additional results for “Seller Debt in Acquisitionsof Private Firms: A Security Design Approach.” Section A provides some background definitions andsimple mathematical identities used in the subsequent sections. Section B provides derivations for those...