2022 PERC Symposium Best Paper Award

The Private Equity Research Consortium (PERC) recently convened on November 3-4, in Chapel Hill for the 14th annual research symposium. Over the course of two days, academic researchers and industry practitioners gathered for a discussion of the most pressing issues in private equity. In keeping with tradition, attendees voted for the Best Paper presented at PERC. This year’s award goes to Minmo Gahng and Blake Jackson University of Florida, Warrington College of Business for their paper Selling Private Equity Fees.

Their paper examines private equity (PE) firms’ minority stake sales and the impact of these sales on agency frictions with fund investors. PE firms that have sold minority stakes – primarily to other PE firms – oversee 27% of PE Assets Under Management in 2020. PE firms with strong fundraising and investment records tend to sell stakes. Sellers subsequently experience substantial increases in capital raised (41%) and income (55%). The authors find no evidence of deteriorating fund performance. Sellers invest more capital in their funds, increase employment, and make investor-friendly distributions. The results suggest that the reduced “skin-in-the-game” from stake sales does not exacerbate agency frictions between sellers and their fund investors.