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.

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.

Foreword xiPreface xviiAcknowledgments xxiHow to Use This Book xxiiiAbout the Authors xxvPart One Setting the FoundationChapter 1 Background 3Chapter 2 Private Equity Perspectives 13Chapter 3 Managing the Investment Process 29Chapter 4 Capturing a Portfolio 51Chapter 5 Tracking Portfolio Holdings 63Part Two Measurements and ComparisonsChapter 6 Standard Measures 79Chapter 7 The IRR 89Chapter 8 Universe Comparisons 111Chapter 9 Flawed Research Methodologies 129Chapter 10 Visualizing Private Equity Performance 137Chapter 11 The IRR and the Public Markets 153Part Three Topics on RiskChapter 12 Performance Attribution 165Chapter 13 The Concentration of Wealth 175Chapter 14 The Diversification of Portfolios 185Chapter 15 Cash Management Models 193Part Four ConclusionsChapter 16 The Private Equity Professional 211Chapter 17 Summary 217Appendix A Proposed Venture Capital Portfolio Valuation Guidelines 221Appendix B On-Site GP Audit Program Guide 223Appendix C Qualitative Due Diligence: Structured Interview 225Appendix D Qualitative Due Diligence: Structured Reference Calls 229Appendix E Request for Information (RFI) 231Appendix F Advanced Topics: Duration of Performance 235Appendix G Advanced Topics: Correlation and Opportunity Costs 239Appendix H Patent Summaries 249References 253Index 257