Global Private Equity Performance Series
In most of modern finance, things tend to matter only if they can be measured precisely and frequently. By contrast, …
Oct 01, 2019
Most hurdle rates featured in private equity funds are set at 8% of internal rate of return. Although the origin of this specific figure is unclear, it is still largely applied to this day. It is of crucial importance for the fund manager: if this rate of return is not reached, then fund investors collect the full profits of the fund.
As the hurdle rate is time sensitive, this puts venture fund managers at a disadvantage, especially since venture-backed companies tend to stay private longer. More than 60% of LBO funds managed to beat the hurdle, while only 38% of VC funds exceeded the 8% threshold. This confirms that shorter holding periods characteristic for buyout strategy go in favour of LBO fund managers.
Global Private Equity Performance Series
In most of modern finance, things tend to matter only if they can be measured precisely and frequently. By contrast, …
Oct 01, 2019
AI²: Alternative Investments Meet Artificial Intelligence
The profitability and investment potential into AI is not a contentious topic. But to what extent could AI disrupt and …
Sep 26, 2019
Private vs. public:
co-movements are stronger than you think
The quarterly movements of multiples of US LBO funds and major US stock indexes appear to be significantly positively correlated, …
Sep 20, 2019