{"title":"Prolonged Private Equity Holding Periods: Six Years Is the New Normal","authors":"Juha Joenväärä, Juho Mäkiaho, Sami Torstila","doi":"10.2139/ssrn.2872585","DOIUrl":null,"url":null,"abstract":"The high internal rates of return sought by private equity funds are highly sensitive to portfolio company holding periods. The authors examine the determinants of holding periods for a sample of European buyouts from 2000 to 2015. Their results establish that the average holding period has lengthened to 5.8 years in the period after the Global Financial Crisis. What explains this fact? The European sample allows the authors to control for both portfolio-company-level and fund-level differences. They first rule out that the increase is fully driven by changes in exit markets. Increased competition in European private equity markets remains a plausible complementary mechanism.","PeriodicalId":45142,"journal":{"name":"Journal of Alternative Investments","volume":null,"pages":null},"PeriodicalIF":0.4000,"publicationDate":"2020-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.2872585","citationCount":"3","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Alternative Investments","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.2872585","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 3
Abstract
The high internal rates of return sought by private equity funds are highly sensitive to portfolio company holding periods. The authors examine the determinants of holding periods for a sample of European buyouts from 2000 to 2015. Their results establish that the average holding period has lengthened to 5.8 years in the period after the Global Financial Crisis. What explains this fact? The European sample allows the authors to control for both portfolio-company-level and fund-level differences. They first rule out that the increase is fully driven by changes in exit markets. Increased competition in European private equity markets remains a plausible complementary mechanism.
期刊介绍:
The Journal of Alternative Investments (JAI) provides you with cutting-edge research and expert analysis on managing investments in hedge funds, private equity, distressed debt, commodities and futures, energy, funds of funds, and other nontraditional assets. JAI is the official publication of the Chartered Alternative Investment Analyst Association (CAIA®). JAI provides you with challenging ideas and practical tools to: •Profit from the growth of hedge funds and alternatives •Determine the optimal mix of traditional and alternative investments •Measure and track portfolio performance •Manage your alternative investment portfolio with proven risk management practices