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Authors: Jian Zhang, Ph.D., CFA, Adams Street Partners, Investment Strategy and Risk Management, Greg Brown, Ph.D.¹, UNC Kenan-Flagler Business School and Institute for Private Capital, and Wendy Hu, Ph.D., Burgiss and Institute for Private Capital

This paper provides the first large-sample analysis of buyout and venture capital fund values over their lifetimes. Specifically, we examine interim fund investment multiples (TVPIs), internal rates of return (IRRs), and direct-alphas based on the current reported net asset values (NAVs) at each quarter of a fund’s life. Using a sample of 1,400 mature buyout and VC funds, we find that the typical fund experiences a fall-off in returns after it is about 7 to 8 years old. However, the remaining performance is highly variable for funds of all ages and the dispersion in returns also tends to increase after funds are about 8 years old. We examine the cross-sectional determinants of remaining fund value and find that several fund-specific and market-wide factors determine future performance and that these vary by type and age of fund. For example, young funds tend to be harmed by high levels of market-wide dry powder whereas older funds appear to benefit.

Read the full paper to learn more


* We thank Burgiss, the Private Equity Research Consortium and the Institute for Private Capital for generous support of this research project. We also thank Joe Goldrick and Jeff Akers for detailed feedback on the analysis.

1. Corresponding author: Prof. Gregory W. Brown, Sarah Graham Kenan Distinguished Professor of Finance, Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, CB 3440, Kenan Center 301, Chapel Hill, NC 27599-3440 USA. (919) 962-9250 <gregwbrown@unc.edu>.

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