Private Equity

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.

James M. Kocis (Hoboken, NJ) is the founder and President of the Burgiss Group, one of the leading software and financial service providers to the private equity industry. James C. Bachman IV, CAIA (Hoboken, NJ), is a Senior Associate at the Burgiss Group. Austin M. Long III, JD, CPA (Austin, TX), is a cofounder of the Alignment Capital Group, a private equity consulting firm. Craig J. Nickels, CFA (St. Louis, MO), is Director of Private Markets for Washington University in St. Louis, where he oversees the University's endowment.

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