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Performance Measurement and Benchmarking in Private Equity

Performance Measurement and Benchmarking_Cover_170x200


Publication date:
01 November 2011
No. of pages:

Performance Measurement and Benchmarking in Private Equity provides fund managers and investors with a ready-made and comprehensive source of top-level theoretical guidance and also practical direction on how to best meet the enduring performance challenge in private equity.

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A practical guide to calculating and reporting investment performance

Co-edited by Montana Capital Partners

When it comes to benchmarking and performance measurement in private equity, a perplexingly wide range of views still persists on how these essential tasks can be best performed. For a trillion dollar global asset class that plays an increasingly important role in institutional investment portfolios, this widespread ambiguity over its true return-generating prowess is surprising to say the least. For investors, it is also highly problematic.
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The uncertainty prevails despite a sizeable and significant body of analytical work on the subject already in existence. Leading academics, as well as influential practitioners with both GP and LP credentials, have studied the topic at length and are continuing to do so.

The way the industry reports performance can grossly exaggerate the true numbers.”
Ludovic Phalippou, Saïd Business School, Oxford University

To practitioners, this ongoing work is of great importance, as it provides fund managers and investors with answers to some of the most fundamental questions in the private equity business today: what is private equity’s historical performance been to date? How strong a performer is the asset class in absolute terms, and how attractive is it to investors relative to other classes? Has it outperformed public markets? Which aspects of the performance measurement problem have already been resolved, and which continue to await their resolution? How can fund managers most effectively benchmark their results against those of their rivals? And how can limited partners distinguish between those GPs who really are top performers, and those who merely claim to be?

Performance Measurement and Benchmarking in Private Equity is a collection of chapters drawn from the most authoritative writing on the subject currently available which answers these questions.

Key benefits
  • Gain a deep and well-grounded understanding of how to measure, analyse, interpret and benchmark investment performance in the asset class, both at the portfolio and the fund level
  • Decide the best methodology for your performance measurement, whether a general partner, limited partner, investment advisor or consultant, through our analysis of the full range of existing methodologies and their respective strengths and limitations
  • As a GP you will be able to differentiate your own performance against the results achieved by your competitors, and as an LP you will be able to identify the firms and funds that genuinely outperform
Topics covered:
  • Understanding performance in private equity: why the ambiguity?
  • Cash flow, risk and return: key characteristics of private equity
  • Looking for the premium: what can and should private equity deliver to the end investor?
  • IRR and beyond: what it does and doesn’t measure
  • Better than what? Strengths and weaknesses of existing benchmarking methods
  • Getting down to the numbers: how good is the data, and where does it come from?
  • Winners and losers: private equity’s stark performance differential
Who should buy this book:
  • Institutional investors with existing private equity portfolios
  • Investors considering to enter the private equity market
  • Limited partners in private equity funds
  • Chief investment officers
  • Investment consultants
  • Gatekeepers
  • Private equity fund managers (GPs)
  • Private equity CFOs
  • Librarians
  • Academics
  • Students who would like to get an overview of different performance measures

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