Private Equity Asset Class Performance
Gavin Ryan
25 years: Private equity & banking
Private equity performance statistics should always be analysed with some scepticism; because they are extremely unreliable and inconclusive. Gavin explains why this is the case by analysing the key performance metrics: Internal Rate of Return (IRR), Cash Multiple, Distributions to Total Value (DVTV) and Residual Value to Total Value (RVTV).
Private equity performance statistics should always be analysed with some scepticism; because they are extremely unreliable and inconclusive. Gavin explains why this is the case by analysing the key performance metrics: Internal Rate of Return (IRR), Cash Multiple, Distributions to Total Value (DVTV) and Residual Value to Total Value (RVTV).
Private Equity Asset Class Performance
10 mins 58 secs
The private equity (PE) asset class is notoriously opaque, when it comes to divulging information about the performance of investments and funds. Private equity performance statistics should always be analysed with some scepticism. The two main methods to analyse private equity performance are the Public Market Equivalent method, which benchmarks against listed companies or an index; and Value Attribution Analysis, which traces the sources of value creation in an investment. Historically, the PE asset class has returned between 9 and 12% on average; and the top/bottom quartile spread is over 20%.
Key learning objectives:
What are the key performance metrics?
How does PME work?
How does VAA work?
Gavin Ryan
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