Picking Partners: Manager Selection in Private Equity

Amit Goyal, Sunil Wahal and M. Deniz Yavuz
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Sunil Wahal: Arizona State University (ASU) - Finance Department
M. Deniz Yavuz: Purdue University - Krannert School of Management

No 21-86, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We study the selection of private equity managers (GPs) for over 100,000 capital commitments between 1990 and 2019 by global institutional investors (LPs) choosing from a plausible contemporaneous opportunity set. In addition to chasing GPs with high prior performance, LPs have large propensities to select first-time or young GPs without a performance history. LPs also have tendencies to follow their peers’ investment decisions, to reinvest with the same GP, and to invest with GPs domiciled in the same state/country. These selection criteria, however, do not provide information material for future performance, and in the case of first-time GPs are associated with lower future performance.

Keywords: private equity; manager selection (search for similar items in EconPapers)
JEL-codes: G10 G11 G20 G23 H55 H75 J32 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2021-08
New Economics Papers: this item is included in nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2186

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