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Private Equity Performance: A Survey

Author

Listed:
  • Berk A. Sensoy

    (Department of Finance, Fisher College of Business, Ohio State University, Columbus, Ohio 43210)

  • Steven N. Kaplan

    (Booth School of Business, University of Chicago, Chicago, Illinois 60637; and National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

We survey the literature on private equity performance, focusing on venture capital and buyout funds rather than on portfolio companies. We describe recent findings on performance measures, average fund returns, risk adjustments, cyclicality and liquidity, persistence, interim returns and self-reported net asset values, the performance of different types of investors in funds, and the links between management contracts and fund returns. Buyout funds have outperformed the S&P 500 net of fees on average by approximately 20% over the life of the fund. Venture capital funds raised in the 1990s outperformed the S&P 500, whereas those raised in the 2000s underperformed. The results are consistent across a number of data sets and papers. Before the 2000s, buyout and venture capital fund performance showed strong evidence of persistence. Since 2000, buyout fund persistence has declined, whereas venture capital fund persistence has remained equally strong.

Suggested Citation

  • Berk A. Sensoy & Steven N. Kaplan, 2015. "Private Equity Performance: A Survey," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 597-614, December.
    • Handle: RePEc:anr:refeco:v:7:y:2015:p:597-614
    DOI: 10.1146/annurev-financial-111914-041858
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    Cited by:

    1. Paleit, Sören & Riar, Frederik J. & Hülsbeck, Marcel & Hack, Andreas, 2025. "Family firm perceptions and investment decisions: An experimental conjoint analysis of private equity investors," Journal of Family Business Strategy, Elsevier, vol. 16(3).
    2. Kurtović, Hrvoje & Markarian, Garen, 2024. "Tail risks and private equity performance," Journal of Empirical Finance, Elsevier, vol. 75(C).
    3. Wood, Geoffrey & Papagiannakis, Giorgos & Ioakimidis, Marilou & Martin, Jens, 2026. "Internationalization and Private Equity Partnerships: Legal Origin Heterogeneity and Fund Performance," International Business Review, Elsevier, vol. 35(1).
    4. Arpit Gupta & Stijn Van Nieuwerburgh, 2019. "Valuing Private Equity Strip by Strip," NBER Working Papers 26514, National Bureau of Economic Research, Inc.
    5. Kärnä, Anders & Myers, Samantha, 2025. "Plundered or profitably pumped-up? The effects of private equity takeover," Economics Letters, Elsevier, vol. 247(C).
    6. Brown, Gregory & Harris, Robert & Hu, Wendy & Jenkinson, Tim & Kaplan, Steven N. & Robinson, David T., 2021. "Can investors time their exposure to private equity?," Journal of Financial Economics, Elsevier, vol. 139(2), pages 561-577.
    7. Vikas Agarwal & Brad Barber & Si Cheng & Allaudeen Hameed & Ayako Yasuda, 2023. "Private Company Valuations by Mutual Funds," Review of Finance, European Finance Association, vol. 27(2), pages 693-738.
    8. Matthias Huss & Daniel Steger, 2020. "Diversification and Fund Performance—An Analysis of Buyout Funds," JRFM, MDPI, vol. 13(6), pages 1-17, June.
    9. Kärnä, Anders & Myers, Samantha, 2024. "Plundered or profitably pumped-up? The effects of private equity takeover," Working Paper Series 444, Sveriges Riksbank (Central Bank of Sweden).
    10. Block, Joern & Fisch, Christian & Vismara, Silvio & Andres, René, 2019. "Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels, and family offices," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 329-352.
    11. Vladimiro Marini & Massimo Caratelli & Gian Paolo Stella & Ilaria Barbaraci, 2022. "Is corporate governance of private equity targets more effective for risk mitigation?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(3), pages 781-811, September.
    12. Cole,Shawn Allen & Melecky,Martin & Molders,Florian & Reed,Tristan, 2020. "Long-run Returns to Impact Investing in Emerging Market and Developing Economies," Policy Research Working Paper Series 9366, The World Bank.
    13. Andonov, Aleksandar & Kraussl, Roman & Rauh, Joshua D., 2018. "The Subsidy to Infrastructure as an Asset Class," Research Papers 3737, Stanford University, Graduate School of Business.
    14. Arpit Gupta & Stijn Van Nieuwerburgh, 2021. "Valuing Private Equity Investments Strip by Strip," Journal of Finance, American Finance Association, vol. 76(6), pages 3255-3307, December.
    15. Agarwal, Vikas & Barber, Brad M. & Cheng, Si & Hameed, Allaudeen & Shanker, Harshini & Yasuda, Ayako, 2023. "Do investors overvalue startups? Evidence from the junior stakes of mutual funds," CFR Working Papers 23-04, University of Cologne, Centre for Financial Research (CFR).
    16. Wolfgang Breuer & Andreas Pinkwart, 2018. "Venture capital and private equity finance as key determinants of economic development," Journal of Business Economics, Springer, vol. 88(3), pages 319-324, May.
    17. Kallenos, Theodosis L. & Nishiotis, George P., 2023. "Market-based private equity returns," Journal of Banking & Finance, Elsevier, vol. 157(C).
    18. Aleksandar Andonov & Roman Kräussl & Joshua Rauh & Stijn Van Nieuwerburgh, 2021. "Institutional Investors and Infrastructure Investing [Pension fund asset allocation and liability discount rates]," The Review of Financial Studies, Society for Financial Studies, vol. 34(8), pages 3880-3934.
    19. Tereza Tykvová, 2018. "Venture capital and private equity financing: an overview of recent literature and an agenda for future research," Journal of Business Economics, Springer, vol. 88(3), pages 325-362, May.

    More about this item

    Keywords

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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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