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Private Equity Institute

Private Equity Institute

Investor Issues

Adverse selection and the performance of private equity co-investments

Tim Jenkinson
Reiner Braun, Christoph Schemmerl
Investors increasingly look for private equity funds to provide opportunities for co-investing outside the fund structure, thereby saving fees and carried interest payments.

Private equity net asset values and future cash flows

Tim Jenkinson
Wayne Landsman, Brian Rountree, Kazbi Soonawalla
This paper analyzes whether fund valuations produced by private equity managers are biased predictors of future discounted cash flows (DCF). Our research is based on an extensive set of timed cash flows and reported net asset values (NAVs) that relate to 645 funds spanning 1988-2014.
The relationship between investment managers and brokers has been identified by regulators in Europe and the US as a potential source of conflicts of interest, with investment managers buying a bundle of services – including trade execution and sell-side research – from brokers at the expense of the investors.

Picking winners? Investment consultants' recommendations of fund managers

Howard Jones
Tim Jenkinson, Jose Vicente Martinez
U.S. plan sponsors managing over $13 trillion rely on investment consultants for advice about which funds to invest in. Using survey data, we analyze what drives consultants’ recommendations of institutional funds, what impact these recommendations have on flows, and how much value they add to plan sponsors.

Are too many private equity funds top quartile?

Robert S. Harris
Rüdiger Stucke
Assessing investment performance for private equity is inherently difficult due in large part to the nature of illiquid assets. Compounding this problem, investors and researchers alike are bedeviled by the existing lack of comprehensive, high‐quality data.
This paper shows that acquisitions of acquirers represent half of the value destruction in corporate takeovers and announcement returns decrease monotonically with the number of past acquisitions made by the target.

Is Yale a model?

Ludovic Phalippou
The recent decade has seen the emergence of the 'Yale model' of portfolio management. Most of it rests on one fact: by having an aggressive allocation to private equity, Yale grew its endowment significantly.
Using survey data we analyze how institutional investors form expectations about the future performance of their asset managers: their expectations are a function of managers’ non-performance attributes, as well as of their past performance
Private equity firms increasingly sell companies to each other in secondary buyouts (SBOs). We examine commonly expressed concerns regarding SBOs using novel and unique datasets.
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