Enhancing Private Equity Manager Selection with Deeper Data

eVestment

Research

14 Pages

eVestment explores how private equity manager selection depends less on access and more on disciplined due diligence. The paper challenges the belief that top managers repeat success, noting only 19% of post 2001 buyout successor funds remained top quartile performers despite industry obsession with persistence.

Key Takeaways

Performance Persistence Weakens: Only 19% of buyout successor funds raised after 2001 repeated top quartile performance, reinforcing how difficult sustained outperformance has become in private equity.
Skill Matters More: Research covering 12,000 fund investments across 630 LPs found a one standard deviation increase in selection skill improved IRRs by roughly 3 percentage points.
IRR Comparisons Distorted: eVestment found 61% of investors struggle comparing manager performance fairly, while 75% recalculate cash flows themselves to standardize reported returns.
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