Foreword
| Private Equity Findings launched 20 issues and 15 years ago with the aim of bridging the academic and private equity practitioner worlds by showcasing some of the most important findings from high quality research and encouraging debate with general and limited partners. Back then, Findings’ academic partner was Francesca Cornelli at London Business School. Francesca, now dean of North-western University’s Kellogg School of Management, was instrumental in getting the publication off the ground and directing academic editorial content for the first 11 issues. We’d like to thank Francesca for her insights and contribution to the publication over the years.
To celebrate our 20th issue, we caught up with three of the academics featured in our first three issues to discuss the contribution of academic thinking to our understanding of the asset class. In A bigger picture, we revisit some of the most important work of the past 15 years. PE may be much bigger and more important to the economy than it was back in 2009, but some of the issues it currently faces bear some similarity to those seen in the aftermath of the Global Financial Crisis. The article also offers a taste of what lies ahead as the academics discuss up-and-coming research projects. The past can certainly be instructive, but we should also look to the future. As artificial intelligence develops rapidly, what comes next for PE might be quite different from what we’ve seen to date. Our roundtable discussion, Will AI transform private equity?, examines the findings of three recent academic research papers into the effect of this technology on three aspects of PE investing – limited partners’ fund selection processes, venture capital deal origination, and finding the right portfolio company board members. New technology is similarly at the forefront in Time for a new model?, which discusses an updated methodology for estimating LP cash flows from PE funds – a notoriously difficult exercise. With more advanced computing power and the benefit of more plentiful historical PE fund data, researchers have devised the methodology as a successor to the widely used Takahashi-Alexander model, which was developed for the Yale University endowment back in 2001. The piece explains how the model works and its applications, then offers a real-world perspective from a professional who previously worked alongside one of the original model’s creators. PE firms have grown tremendously over the past 15 years, with many general partners managing funds across strategies and several regions. GP stake sales have become an increasingly popular means of achieving this expansion. In What’s at stake?, we explore this phenomenon with the aid of a new research paper that looks into how these deals affect fund performance and alignment with LPs’ interests. And finally, The side letter arms race outlines the findings of a new research paper by two law professors on what purpose these negotiated documents serve. Now an established feature of any fundraising, side letters have attracted attention and some criticism for favouring the interests of larger LPs over smaller ones, but is this really true? As ever, we welcome any feedback or comments on the content of our latest issue of Private Equity Findings, please contact us. |
 Entrepreneurial Management Unit, Harvard Business School
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