Pay now or pay later? The economics within the private equity partnership

Victoria Ivashina and Josh Lerner

Journal of Financial Economics, 2019, vol. 131, issue 1, 61-87

Abstract: The economics of partnerships have been of enduring interest to economists, yet it is not clear what profit sharing within a private partnership should look like. We examine over 700 private equity partnerships and show that the allocation of fund economics to individual partners varies drastically, even among the most senior partners, and appears divorced from past success as an investor, being instead related to status as a founder. A smaller share of carried interest and ownership—and inequality in fund economics more generally—is associated with departures of senior partners which, in turn is negatively related to the funds’ ability to raise additional capital.

Keywords: Partnerships; Venture capital; Leveraged buyout (search for similar items in EconPapers)
JEL-codes: G24 J33 L26 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X18302058
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Pay Now or Pay Later?: The Economics within the Private Equity Partnership (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:131:y:2019:i:1:p:61-87

DOI: 10.1016/j.jfineco.2018.07.017

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().