Retrospective: A bigger picture
When Private Equity Findings launched 15 years ago, the industry was dealing with the issues stemming from the Global Financial Crisis and the flurry of deals that preceded it. In our first three issues, we spoke to academics Steven Kaplan, Antoinette Schoar and Josh Lerner about what their research told us about how private equity and its investors would fare. For our 20th issue, we revisit these topics in the light of today’s turbulence and discuss the contribution of academic research to how we understand the market.
Jeremy Coller
When we published our first issue in late 2009 it had been a challenging year for the industry, with total capital raised by private market funds falling by $390bn compared with 2008. Today, the industry faces similar difficulties, with private market fundraising $453bn lower in 2023 than the industry’s high in 2021.
Fundraising challenges are not the only familiar tale we see over the span of 20 issues. For all the ups and downs of the industry, the PE modus operandi of backing and supporting high quality management teams running resilient, high-growth businesses to generate strong returns for investors has remained both constant and fundamental to the industry’s success.
That doesn’t mean the industry has stood still. Just look at the scale of the numbers involved: when fundraising fell in 2009, it was to $317bn; by 2023, a “difficult year” was one in which the industry raised $1.2trn. Alongside incredible growth, 20 issues of Private Equity Findings tell a story of evolution and innovation. From growing LP allocations to private debt and infrastructure to innovations in the secondaries market that provide liquidity and portfolio management tools for LPs and, increasingly, GPs, the industry’s status in the broader economy has changed almost beyond recognition. As the number of public companies has declined, private equity and venture capital-backed company totals have swelled as management teams increasingly opt to stay private for longer.
Since 2009, Private Equity Findings has showcased some of the most important and influential academic research into the industry. Many of the findings we have discussed demonstrate PE’s benefits to the companies it backs and to its LPs. Yet we have not shied away from findings that portray PE in a less positive light – rather, we have sought to generate healthy and respectful debate between academics and practitioners.
To open our 20th issue, we spoke to three academics who have appeared many times on our pages. Steven Kaplan of the University of Chicago Booth School of Business, Antoinette Schoar of MIT Sloan School of Management, and Josh Lerner of Harvard Business School (who co-edits this publication), are joined by Rich Carson, managing director of Cambridge Associates. Together, they review the contribution of PE research to our understanding of the asset class, and share what their collective knowledge tells us about the future of an industry in which the only true constant is change.
Meet the academics
Richard Carson
Richard is managing director – private investments at Cambridge Associates, where he is responsible for private investments data assets, related technology and strategic partnerships, and overseeing the firm’s private investment benchmarks. Before joining Cambridge Associates in 2012, he was a partner at strategy consulting firm Monitor Deloitte and at related PE firms Monitor Clipper Partners and Monitor Capital.
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Josh Lerner
Josh is the Jacob H Schiff Professor at Harvard Business School. Much of his research focuses on VC and PE organisations. He also examines policies on innovation and how they impact firm strategies. He co-directs the National Bureau of Economic Research’s (NBER) Productivity, Innovation, and Entrepreneurship Program and serves as co-editor of their publication, Innovation Policy and the Economy. He founded and runs the Private Capital Research Institute, a non-profit devoted to encouraging access to data and research.
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Antoinette Schoar
Antoinette is the Stewart C Myers-Horn Family professor of finance at MIT Sloan School of Management. Her research interests span from entrepreneurial finance to fintech, consumer finance and financial intermediation. She has received several awards, including the Kauffman Prize Medal for Distinguished Research in Entrepreneurship and the Brattle Prize for best paper in The Journal of Finance. She is also co-chair of the corporate finance group at the NBER.
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Steven Kaplan
Steven is the Neubauer family distinguished service professor of entrepreneurship and finance at The University of Chicago Booth School of Business and Kessenich EP Faculty director at the Polsky Center for Entrepreneurship and Innovation. He conducts research on PE, VC, entrepreneurial finance and corporate finance. He is also a research associate at the NBER. |