What Do Private Equity Firms Say They Do?

Paul Gompers, Steven Kaplan () and Vladimir Mukharlyamov

No 21133, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We survey 79 private equity investors with combined AUM of over $750B about their practices in firm valuation, capital structure, governance, and value creation. Investors rely primarily on IRR and multiples to evaluate investments. Their LPs focus more on absolute performance. Capital structure choice is based equally on optimal trade-off and market timing considerations. PE investors anticipate adding value to portfolio companies, with a greater focus on increasing growth than on reducing costs. We also explore how the actions that PE managers say they take group into specific firm strategies and how those strategies are related to firm founder characteristics.

JEL-codes: G24 G3 G31 G32 (search for similar items in EconPapers)
Date: 2015-04
Note: CF PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Paul Gompers & Steven N. Kaplan & Vladimir Mukharlyamov, 2016. "What do private equity firms say they do?," Journal of Financial Economics, vol 121(3), pages 449-476.

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Related works:
Journal Article: What do private equity firms say they do? (2016)
Working Paper: What Do Private Equity Firms Say They Do? (2015)
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