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Small PE firms outshine the largest over returns

September 4, 2021

first_img THE biggest private equity firms have not delivered the best returns, new research from European business school EDHEC showed yesterday.A firm’s size has a huge influence on its investments’ level of return – and this overwhelmingly seems to favour small independent firms over larger groups. Large firms which hold a large number of investments at the same time “underperform substantially”, according to the study that analysed 7,500 private equity investments worldwide over 40 years.Super-sized private equity houses such as Carlyle, with more than 400 investment managers and $98bn (£62bn) under management or KKR with $55.5bn under management and 650 staff, say they use their global reach and expertise to deliver market-leading returns. But layers of hierarchy and higher communication costs in big firms created diseconomies of scale, outweighing the benefits of pooling knowledge, the report said.Longer duration deals generated much lower returns than those held for less than two years. One in four deals achieved an internal rate of return (IRR) above 50 per cent, while the median IRR was 21 per cent. Share Monday 17 January 2011 8:54 pm Show Comments ▼ Tags: NULL whatsapp KCS-content whatsapp Small PE firms outshine the largest over returns Read This NextRicky Schroder Calls Foo Fighters’ Dave Grohl ‘Ignorant Punk’ forThe WrapCNN’s Brian Stelter Draws Criticism for Asking Jen Psaki: ‘What Does theThe WrapDid Donald Trump Wear His Pants Backwards? Kriss Kross Memes Have AlreadyThe WrapPink Floyd’s Roger Waters Denies Zuckerberg’s Request to Use Song in Ad:The Wrap’Sex and the City’ Sequel Series at HBO Max Adds 4 More ReturningThe WrapHarvey Weinstein to Be Extradited to California to Face Sexual AssaultThe WrapThe Truth About Bottled Water – Get the Facts on Drinking Bottled WaterGayot’The View’: Meghan McCain Calls VP Kamala Harris a ‘Moron’ for BorderThe Wrap’Black Widow’ First Reactions: ‘This Is Like the MCU’s Bond Movie’The Wrap last_img

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