Interim fund performance and fundraising in private equity

Brad Barber and Ayako Yasuda

Journal of Financial Economics, 2017, vol. 124, issue 1, 172-194

Abstract: General partners (GPs) in private equity (PE) report the performance of an existing fund while raising capital for a follow-on fund. Interim performance has large effects on fundraising outcomes. The impact is greatest when backed by exits and for low reputation GPs. Faced with these incentives, GPs time their fundraising to coincide with periods of peak performance through two strategies: (1) exit and fundraise and (2) net asset value (NAV) management. Consistent with the former, performance peaks are greatest for funds with high realization rates. Consistent with the latter, low reputation GPs with low realization rates experience performance peaks and erosions in performance after fundraising.

Keywords: Private equity; Venture capital; Institutional investors; Fund manager evaluation (search for similar items in EconPapers)
JEL-codes: G10 G20 G23 G24 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Interim Fund Performand and Fundraising in Private Equity (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:124:y:2017:i:1:p:172-194

DOI: 10.1016/j.jfineco.2017.01.001

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