The private equity industry is characterized by volatile returns. Only the higher end of the market offers attractive returns relative to other asset classes. The standard comparison of a general partner’s past performance at fund level to the average performance of comparable funds raised in the same year does not reveal underlying value drivers. Moreover, lack of transparency and standardized reporting make the quantitative analysis of track records labor intensive. The multitude of competing benchmarks and performance measurement methods make it difficult for GPs to effectively communicate key aspects of their track record in an effective fashion, while LPs often find it difficult to separate the noise from the signal in their analysis of different GPs all claiming ‘Top Quartile’ status.

PERACS helps investors in private equity to overcome the above mentioned limitations and inefficiencies in the fundraising and fund due diligence process. We provide a comprehensive set of advanced analyses and performance benchmarks on the deal, fund and general partner levels that is complementary to existing industry approaches.

Our Five Metrics encompass the following:

Measuring Returns

— Enhanced Performance Measurement
— Implicit Public-Market Benchmarking
— Quantification of different components of GP’s added value

Benchmarking Returns

— Objective and data-driven identification of ‘Relevant Peer Funds’
— Insightful benchmarking against the aggregate performance of relevant competitors

Empirical Documentation of Value Creation Components

— Growth, Efficiency gains, multiple expansion, debt reduction, currency fluctuation

Strategic Distinctiveness

— Measures of distinctive strategy, proprietary deal flow and strategic consistency/drift

Returns Volatility Measures

— Proprietary measures of risk and portfolio volatility based on historical return distributions