The Performance of Private Equity Funds - An empirical study on the performance of private equity funds with European managers, private equity firm expertise, and the impact of macroeconomic crise

Abstract

This thesis studies the absolute and relative performance of European private equity funds, using a data set of 417 buyout funds raised between 1999 and 2016. The average European private equity fund provides annual returns of near 18% (net of fees and carry) and outperforms public markets by a minimum of 12% over the life of the fund. Performance patterns are cyclical, yet relative performance less cyclically sensitive than absolute performance. Human capital encourages valuecreation in private equity, as factors proxied for expertise by private equity firms drive performance. These results indicate that the average European private equity fund delivers premium returns over time. We acknowledge that sample selection bias and zombie funds can influence our results but conclude that such issues are improbable to do so. Key words: private equity funds, performance, public markets, cyclicality, leveraged buyout, PME, IRR, global financial crisis, oil price crash