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Assessing Private Equity Performance
Chaplinsky, Susan; Loutskina, Elena Technical Note F-1895 / Published July 30, 2019 / 18 pages.
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Product Overview

Assessing the performance of private equity (PE) and venture capital (VC) investment vehicles is a challenging task. It starts with the fact that the assets are privately held and illiquid. By contrast, PE valuations are determined in a vast open market populated largely by disinterested investors acting on publicly available information. As PE and VC have grown as asset classes, investors have pushed for greater disclosure and more standardization of performance metrics and benchmarks. This technical note describes in detail the Global Investment Performance Standards (GIPS) and offers examples of DPI (distributed to paid-in capital), RVPI (residual value to paid-in capital), TVPI (total value to paid-in capital), and PME (public market equivalent) calculations. Although the GIPS guidelines have resulted in greater standardization of the reported information, considerable opportunity remains for general partners to influence fund returns. This note summarizes the key metrics used in assessing PE performance and discusses important areas of general partners’ influence on reported returns.




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  • Overview

    Assessing the performance of private equity (PE) and venture capital (VC) investment vehicles is a challenging task. It starts with the fact that the assets are privately held and illiquid. By contrast, PE valuations are determined in a vast open market populated largely by disinterested investors acting on publicly available information. As PE and VC have grown as asset classes, investors have pushed for greater disclosure and more standardization of performance metrics and benchmarks. This technical note describes in detail the Global Investment Performance Standards (GIPS) and offers examples of DPI (distributed to paid-in capital), RVPI (residual value to paid-in capital), TVPI (total value to paid-in capital), and PME (public market equivalent) calculations. Although the GIPS guidelines have resulted in greater standardization of the reported information, considerable opportunity remains for general partners to influence fund returns. This note summarizes the key metrics used in assessing PE performance and discusses important areas of general partners’ influence on reported returns.

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