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

Robert S. Harris, Tim Jenkinson, Steven N. Kaplan and Ruediger Stucke

No 28109, NBER Working Papers from National Bureau of Economic Research, Inc

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)
Date: 2020-11
New Economics Papers: this item is included in nep-cfn
Note: CF
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Citations: View citations in EconPapers (5)

Published as Robert S. Harris & Tim Jenkinson & Steven N. Kaplan & Ruediger Stucke, 2023. "Has persistence persisted in private equity? Evidence from buyout and venture capital funds," Journal of Corporate Finance, .

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