Edhec research reveals negative correlation between private equity deal performance and duration

Research shows a strong negative association between performance and duration for private equity deals. Quick flips account for 12% of all PE investments with a median internal rate of return of 85%.

Private equity (PE) became a global phenomenon in the past decade as it injected liquidity and fuelled the mergers and acquisitions (M&A) wave in the US and Europe. Strömberg (2007) estimates that by 2007 PE companies worldwide had acquired almost 14,000 companies worth nearly $3.6 trillion.

Although recent papers have begun to analyse investor returns in PE (Kaplan and Schoar (2005); Ljungqvist, Richardson and Wolfenzon (2007)), there is still little evidence on the cross-section of the