What does it take to be good parent ? Opening the black-box of value creation in the unrealated multibusiness firm

This paper develops and tests new theory about the determinants of value creation in unrelated multibusiness firms from a resource-based perspective. The authors argue that the availability of "headquarter resources", which are at the basis of headquarter services provided to the business units, is the driving force behind unrelated diversification.diversification; private equity; management buyout; leveraged buyout; resource-based view; parenting effect; conglomerate

Giants at the Gate: On the Cross-section of Private Equity Investment Returns

We examine the determinants of private equity returns using a newly constructed database of 7,500 investments worldwide over forty years. The median investment IRR (PME) is 21% (1.3), gross of fees. One in ten investments goes bankrupt, whereas one in four has an IRR above 50%. Only one in eight investments is held for less than 2 years, but such investments have the highest returns. The scale of private equity firms is a significant driver of returns: investments held at times of a high number of simultaneous investments underperform substantially. The median IRR is 36% in the lowest scale decile and 16% in the highest. Results survive robustness tests. Diseconomies of scale are linked to firm structure: independent firms, less hierarchical firms, and those with managers of similar professional backgrounds exhibit smaller diseconomies of scale.Private Equity, investment, LBOs, Buyouts

Giants at the Gate: On the Cross-section of Private Equity Investment Returns

We examine the determinants of private equity returns using a newly constructed database of 7,500 investments worldwide over forty years. The median investment IRR (PME) is 21% (1.3), gross of fees. One in ten investments goes bankrupt, whereas one in four has an IRR above 50%. Only one in eight investments is held for less than 2 years, but such investments have the highest returns. The scale of private equity firms is a significant driver of returns: investments held at times of a high number of simultaneous investments underperform substantially. The median IRR is 36% in the lowest scale decile and 16% in the highest. Results survive robustness tests. Diseconomies of scale are linked to firm structure: independent firms, less hierarchical firms, and those with managers of similar professional backgrounds exhibit smaller diseconomies of scale

Giants at the Gate: On the Cross-section of Private Equity Investment Returns

We examine the determinants of private equity returns using a newly constructed database of 7,500 investments worldwide over forty years. The median investment IRR (PME) is 21% (1.3), gross of fees. One in ten investments goes bankrupt, whereas one in four has an IRR above 50%. Only one in eight investments is held for less than 2 years, but such investments have the highest returns. The scale of private equity firms is a significant driver of returns: investments held at times of a high number of simultaneous investments underperform substantially. The median IRR is 36% in the lowest scale decile and 16% in the highest. Results survive robustness tests. Diseconomies of scale are linked to firm structure: independent firms, less hierarchical firms, and those with managers of similar professional backgrounds exhibit smaller diseconomies of scale

La vérité sur les performances dans le capital-investissement

The truth about private equity performance For some years now, the belief that private equity consistently outperforms other asset classes has been supported by articles appearing regularly in the economic and financial press praising the returns on private equity funds. Performance statistics published by industry standard Thomson Venture Economics suggest that, over the long term, private equity returns compare quite well to those of market indices. Despite this clear consensus, the point of view that private equity outperforms investments in listed assets is incorrect. Using the most comprehensive data on private equity in North America and Europe, we are able to demonstrate that private equity returns have been on average nearly 3% lower per year than those of the major market indices. JEL Classification : G23, G24Depuis quelques années, la croyance en une surperformance du capital-investissement est alimentée par les articles élogieux sur les rendements de cette classe d’actifs qui paraissent régulièrement dans la presse économique et financière. Les statistiques de mesure des performances publiées par Thomson Venture Economics, qui servent de standard dans la profession, suggèrent que, sur une longue période, les performances du capital-investissement se comparent favorablement à celles des indices boursiers. En dépit de ce consensus apparent, le point de vue d’une surperformance du capital-investissement vis-à-vis d’un placement dans le coté est erroné. En utilisant les données les plus complètes sur le capital-investissement en Amérique du Nord et en Europe, nous montrons que les performances du capital-investissement ont été, en moyenne, inférieures de près de 3 % par an à celles des grands indices de marché. Classification JEL : G23, G24Gottschalg Olivier, Phalippou Ludovic. La vérité sur les performances dans le capital-investissement . In: Revue d'économie financière, n°93, 2008. Les fonds de private equity pp. 201-211

La vérité sur les performances dans le capital-investissement

The truth about private equity performance For some years now, the belief that private equity consistently outperforms other asset classes has been supported by articles appearing regularly in the economic and financial press praising the returns on private equity funds. Performance statistics published by industry standard Thomson Venture Economics suggest that, over the long term, private equity returns compare quite well to those of market indices. Despite this clear consensus, the point of view that private equity outperforms investments in listed assets is incorrect. Using the most comprehensive data on private equity in North America and Europe, we are able to demonstrate that private equity returns have been on average nearly 3% lower per year than those of the major market indices. JEL Classification : G23, G24Depuis quelques années, la croyance en une surperformance du capital-investissement est alimentée par les articles élogieux sur les rendements de cette classe d’actifs qui paraissent régulièrement dans la presse économique et financière. Les statistiques de mesure des performances publiées par Thomson Venture Economics, qui servent de standard dans la profession, suggèrent que, sur une longue période, les performances du capital-investissement se comparent favorablement à celles des indices boursiers. En dépit de ce consensus apparent, le point de vue d’une surperformance du capital-investissement vis-à-vis d’un placement dans le coté est erroné. En utilisant les données les plus complètes sur le capital-investissement en Amérique du Nord et en Europe, nous montrons que les performances du capital-investissement ont été, en moyenne, inférieures de près de 3 % par an à celles des grands indices de marché. Classification JEL : G23, G24Gottschalg Olivier, Phalippou Ludovic. La vérité sur les performances dans le capital-investissement . In: Revue d'économie financière, n°93, 2008. Les fonds de private equity pp. 201-211