Inside Private Equity explores the complexities of this asset class and introduces new methodologies that connect investment returns with wealth creation. By providing straightforward examples, it demystifies traditional measures like the IRR and challenges many of the common assumptions about this asset class. Readers take away a set of practical measures that empower them to better manage their portfolios.
Autorentext
JAMES M. KOCIS is the founder and President of the Burgiss Group, one of the leading software and financial service providers to the private equity industry. He and his team designed Private i, the world's most popular program for private equity portfolio management. Private i is used to manage in excess of $1 trillion of private equity investments.
JAMES C. BACHMAN IV, CAIA, is the Head of Research at the Burgiss Group. In this role, he is principally responsible for research-related initiatives as well as expanding the technology platform's portfolio management capabilities.
AUSTIN M. LONG III, JD, CPA, is the Head of Alignment Capital, a private equity consultancy. He has been active in the private markets since 1987, when he cofounded what was to become the University of Texas Investment Management Company (UTIMCO) private investment group.
CRAIG J. NICKELS, CFA, is the Director of Private Markets for Washington University in St. Louis, where his responsibilities include the oversight and management of the university's private market investments within the multi-billion endowment.
Klappentext
"This handbook is essential reading for all investors in the private markets. It is especially helpful in understanding the mechanics of portfolio construction and challenges of performance measurement of private equity and venture capital investing."
—Susan J. Carter, President and CEO, Commonfund Capital, Inc.
"An invaluable handbook."
—Sir Ronald Cohen, Chairman of The Portland Trust, Portland Capital LLP, and Bridges Ventures
"Private equity fund investing is often viewed as more art than science, though in reality it requires an even blend of both skills. This book focuses on the science behind the art. It covers all the major concepts while introducing some great new ones, and must be required reading for serious private equity market participants."
—Chihtsung Lam, founder and Managing Director of Axiom Asia Private Capital
"The authors have created a simple and pragmatic handbook for a very complex asset class. Their collective experience is invaluable. This is a fantastic read for new private equity investors as well as experienced portfolio managers looking for additional tools that can be used in monitoring their current investments and in the process of screening new opportunities. Inside Private Equity is a great foundation for investors looking to improve their analysis of an exciting asset class."
—Timothy B. Moore, Director of Alternative Investments, PERA of Colorado
"A real practitioner-focused contribution bringing performance measurement down from the theoretical to the practical."
—Jesse E. Reyes, Reyes Analytics
"Inside Private Equity clearly explains, without oversimplifying, the hard work of managing private equity portfolios. Full of cogent advice from an experienced team. Great work!"
—Lawrence M. Unrein, Managing Director and Head of the Private Equity Group for J.P. Morgan Asset Management
"A handy guide to address the pitfalls and issues of investing in private equity that most institutional investors have wrongly ignored. Well done!"
—Dory Wiley, President and CEO of Commerce Street Capital and Trustee and Chairman of the Investment Committee at Teachers Retirement System of Texas
Zusammenfassung
Inside Private Equity explores the complexities of this asset class and introduces new methodologies that connect investment returns with wealth creation. By providing straightforward examples, it demystifies traditional measures like the IRR and challenges many of the common assumptions about this asset class. Readers take away a set of practical measures that empower them to better manage their portfolios.
Inhalt
Foreword xi
Preface xvii
Acknowledgments xxi
How to Use This Book xxiii
About the Authors xxv
Part One Setting the Foundation
Chapter 1 Background 3
Chapter 2 Private Equity Perspectives 13
Chapter 3 Managing the Investment Process 29
Chapter 4 Capturing a Portfolio 51
Chapter 5 Tracking Portfolio Holdings 63
Part Two Measurements and Comparisons
Chapter 6 Standard Measures 79
Chapter 7 The IRR 89
Chapter 8 Universe Comparisons 111
Chapter 9 Flawed Research Methodologies 129
Chapter 10 Visualizing Private Equity Performance 137
Chapter 11 The IRR and the Public Markets 153
Part Three Topics on Risk
Chapter 12 Performance Attribution 165
Chapter 13 The Concentration of Wealth 175
Chapter 14 The Diversification of Portfolios 185
Chapter 15 Cash Management Models 193
Part Four Conclusions
Chapter 16 The Private Equity Professional 211
Chapter 17 Summary 217
Appendix A Proposed Venture Capital Portfolio Valuation Guidelines 221
Appendix B On-Site GP Audit Program Guide 223
Appendix C Qualitative Due Diligence: Structured Interview 225
Appendix D Qualitative Due Diligence: Structured Reference Calls 229
Appendix E Request for Information (RFI) 231
Appendix F Advanced Topics: Duration of Performance 235
Appendix G Advanced Topics: Correlation and Opportunity Costs 239
Appendix H Patent Summaries 249
References 253
Index 257