Winning Private Equity Fund Managers Are Harder To Spot In Capital-Rich Market
ByThe notion that past performance is a reliable indicator of future returns has been a proud hallmark of private equity (PE) investing since the industry’s earliest days. For institutional investors, the task of separating the top-performing PE firms from the laggards was a pretty straightforward business. The best guide for institutional investors selecting a new fund to invest behind? Look at how the firm’s previous funds fared.
No longer. As we explain in Bain & Company’s Global Private Equity Report 2015, the conditions that made it possible for top PE fund managers to cruise from success to success have washed away in a flood of money-chasing assets in today’s world of superabundant capital. The democratizing influence of plenty of money in the hands of many has had a leveling effect on PE returns. The combination of high acquisition prices and longer hold periods is eroding returns. Meanwhile, slow but steady economic growth in major developed markets has put a floor beneath the returns of the weaker PE performers…
Winning Private Equity Fund Managers Are Harder To Spot In Capital-Rich Market
