Picking Partners: Manager Selection in Private Equity

Author: Amit Goyal, Sunil Wahal, M. Deniz Yavuz

We study the selection of private equity managers (GPs) for over 100,000 capital commitments between 1990 and 2019 by global institutional investors (LPs) choosing from a plausible contemporaneous opportunity set. In addition to chasing GPs with high prior performance, LPs have large propensities to select first-time or young GPs without a performance history. LPs also have tendencies to follow their peers’ investment decisions, to reinvest with the same GP, and to invest with GPs domiciled in the same state/country. These selection criteria, however, do not provide information material for future performance, and in the case of first-time GPs are associated with lower future performance.

Goyal, Amit and Wahal, Sunil and Yavuz, M. Deniz, Picking Partners: Manager Selection in Private Equity (August 24, 2021). Available at SSRN: https://ssrn.com/abstract=3910494 or http://dx.doi.org/10.2139/ssrn.3910494
Source: https://papers.ssrn.com/sol3/papers.cfm?abstr...

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