Abstract

The performance of private investments has historically been undertaken at the fund level. Recent advances in data collection and access have made it possible instead to analyze the performance of private investment deals. One benefit of analyzing deal-level data is it allows for a more granular look at specific sector and industry performance, since most funds are composed of a mixture of industries that precludes that possibility. Another benefit is that it allows a clearer analysis of value accretion since deal-level cash flows are typically gross of fees, whereas fund-level cash flows include fees that a limited partner would experience. Finally, it also allows one to analyze how much the performance of funds depends on finding long tail ”home run” deals. I propose ways of reaping these benefits using a novel data set of private equity deals in U.S. companies from StepStone, focusing on the information technology sector to illustrate. I find that private equity investment in North American information technology companies generally provides excess risk-adjusted returns over the general public market and the information technology public market, although the presence of risk-adjusted returns is disputable for some information technology industries and venture capital.

Authors

William Volckmann, UNC Kenan-Flagler Business School, Institute for Private Capital