Inside Private Equity

Inside Private Equity explores the complexities of this asset class and introduces new methodologies that connect investment returns with wealth creation. By providing straightforward examples, it demystifies traditional measures like the IRR and challenges many of the common assumptions about this asset class. Readers take away a set of practical measures that empower them to better manage their portfolios.

Foreword xi Preface xvii Acknowledgments xxi How to Use This Book xxiii About the Authors xxv Part One Setting the Foundation Chapter 1 Background 3 Chapter 2 Private Equity Perspectives 13 Chapter 3 Managing the Investment Process 29 Chapter 4 Capturing a Portfolio 51 Chapter 5 Tracking Portfolio Holdings 63 Part Two Measurements and Comparisons Chapter 6 Standard Measures 79 Chapter 7 The IRR 89 Chapter 8 Universe Comparisons 111 Chapter 9 Flawed Research Methodologies 129 Chapter 10 Visualizing Private Equity Performance 137 Chapter 11 The IRR and the Public Markets 153 Part Three Topics on Risk Chapter 12 Performance Attribution 165 Chapter 13 The Concentration of Wealth 175 Chapter 14 The Diversification of Portfolios 185 Chapter 15 Cash Management Models 193 Part Four Conclusions Chapter 16 The Private Equity Professional 211 Chapter 17 Summary 217 Appendix A Proposed Venture Capital Portfolio Valuation Guidelines 221 Appendix B On-Site GP Audit Program Guide 223 Appendix C Qualitative Due Diligence: Structured Interview 225 Appendix D Qualitative Due Diligence: Structured Reference Calls 229 Appendix E Request for Information (RFI) 231 Appendix F Advanced Topics: Duration of Performance 235 Appendix G Advanced Topics: Correlation and Opportunity Costs 239 Appendix H Patent Summaries 249 References 253 Index 257