Has Persistence Persisted in Private Equity? Evidence from Buyout and Venture Capital Funds

Robert Harris (), Tim Jenkinson, Steven Kaplan () and Ruediger Stucke ()
Additional contact information
Robert Harris: University of Virginia - Darden School of Business
Steven Kaplan: University of Chicago - Booth School of Business; NBER
Ruediger Stucke: Warburg Pincus LLC

No 2020-167, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: We present new evidence on the persistence of U.S. private equity (buyout and venture capital) funds using cash-flow data sourced from Burgiss’s large sample of institutional investors. Previous research, studying largely pre-2000 data, finds strong persistence for both buyout and venture capital (VC) firms. Using ex post or most recent fund performance (as of June2019), we confirm the previous findings on persistence overall as well as for pre-2001 and post-2000 funds. However, when we look at the information an investor would actually have – previous fund performance at the time of fundraising rather than final performance – we find little or no evidence of persistence for buyouts, both overall and post-2000. For post-2000 buyouts, the conventional wisdom to invest in previously top quartile funds does not hold. Using previous fund PME at fundraising, we find modest persistence, but it is driven by bottom, not top quartile performance. On the other hand, persistence for VC funds persists even when using information available at the time of fundraising. Therefore, the conventional wisdom of investors holds for VC.

JEL-codes: G11 G24 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Has Persistence Persisted in Private Equity? Evidence from Buyout and Venture Capital Funds (2020)
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