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The Public Market Equivalent and Private Equity Performance.

Publication: Research - peer-reviewJournal article

DOI

The authors show that the public market equivalent approach is equivalent to assessing the performance of private equity (PE) investments using Rubinstein’s dynamic version of the CAPM. They developed two insights: (1) one need not compute betas of PE investments, and any changes in PE cash flow betas due to changes in financial leverage, operating leverage, or the nature of the business are automatically taken into account; (2) the public market index used in evaluations should be the one that best approximates the wealth portfolio of the investor considering the PE investment opportunity.

Publication information

Original languageEnglish
JournalFinancial Analysts Journal
Volume71
Issue number4
Pages (from-to)43-50
ISSN0015-198X
DOIs
StatePublished - 2015
Scopus citations

ID: 43966777