Using a large sample of institutional investors' investments in private equity funds raised between 1991 and 2011, we estimate the extent to which investors' skill affects their returns. Bootstrap analyses show that the variance of actual performance is higher than would be expected by chance,...

This paper uses proprietary data from a leading intermediary to understand the magnitude and determinants of transaction costs in the secondary market for private equity stakes. Most transactions occur at a discount to net asset value. Buyers average an annualized public market equivalent of...

We evaluate the performance of limited partners' (LPs) private equity investments over time. Using a sample of 14,380 investments by 1,852 LPs in 1,250 buyout and venture funds started between 1991 and 2006, we find that the superior performance of endowment investors in the 1991-1998 period,...

Standard measures of PE performance based on cash flows overlook discount rate risk. An index constructed from prices paid in secondary market transactions indicates that PE discount rates vary considerably. While the standard alpha for our index is zero, measures of performance based on cash...

When a private equity firm raises a larger fund, performance tends to decline. This pattern is usually interpreted as evidence of decreasing returns. I propose a more innocuous explanation: high-growth private equity firms were on average lucky in the past and therefore are expected to...

There is an ambivalent discussion about the performance of secondary buyouts (SBOs): Private equity (PE) sponsors often assume an underperformance of SBOs compared to primary buyouts (PBOs). However, the share of SBOs grew significantly to more than 50 percent of all buyouts in 2018. This paper...

In private equity industry ESG (Entrepreneurial, Social and Governance) metrics are gaining room, passing from the risk management process to influence the orientation of investment strategies. Motivations refer both to a firmer performance of the invested portfolios during the overall...

Private equity (PE) has developed into a very large and important asset class. Over the past 20 years, the industry has grown from USD 650 billion in assets under management (AUM) to USD 5 trillion, of which today USD 1.7 trillion is “dry powder.” The primary factors driving this strong...

Secondary buyouts (SBOs) represent more than 50 percent of the total private equity (PE) buyout activities. However, in academia and practise, a potential underperformance of SBOs compared to primary buyouts (PBOs) is discussed. Therefore, it is all the more important to further understand how...

Intermediation in private equity involves illiquid investments, professional investors, and high information asymmetry. We use this unique setting to empirically evaluate theoretical predictions regarding intermediation. Placement agent usage has become nearly ubiquitous, but agents are...