NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Venture Capital and Other Private Equity: A Survey

Andrew Metrick, Ayako Yasuda

NBER Working Paper No. 16652
Issued in December 2010
NBER Program(s):Asset Pricing, Corporate Finance

We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and their investors (limited partners), and how/whether these contractual designs affect outcomes. Findings highlight the importance of private ownership, and information asymmetry and illiquidity associated with it, as a key explanatory factor of what makes private equity different from other asset classes.

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Document Object Identifier (DOI): 10.3386/w16652

Published: “Venture Capital and other Private Equity: a Survey” (wi th Ayako Yasuda), European Financial Management 17, 619 - 654 .

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