Chairs

Private Equity Observatory - Buyout Center

Center Holder: Oliver Gottschalg, Associate Professor - Strategy and Business Policy

Private Equity Observatory – Buyout Center is supported by


















 
   




Frederic-Pescatori_member_list
 

Frédéric Pescatori, President of the Observatory, Associate, Bridgepoint 

Frederic Pescatori is partner and head of Bridgepoint’s investment activities in Paris. He is a member of the group’s Administrative Committee, Executive Committee and Investment Committee. He is part of teams specializing in the consumer goods and distribution sector as well as business services. He rejoined Bridgepoint in 2009

Olivier-Gottschalg_member_list
 

Oliver Gottschalg, Professor at HEC
Oliver Gottschalg is an associate professor in strategy and company politics at HEC Paris. He is also the academic director of TRIUM Global Executive MBA, director of track “entrepreneurship” for HEC MBA program and director of the HEC Buyout Research program. He gives classes in strategy, entrepreneurship, the conception of business plans and buyout management. His current research concentrates on strategic logic and determinants for performance for private equity investments.

Cyrille-Chevrillon_member_list
 

Cyrille Chevrillon, Honorary President 

Graduate of HEC in 1976, Cyrille Chevrillon began his career at JP Morgan in New York, then Paris. Founded Chevrillon & Associates in 1992, whilst leading high profile Private Equity groups in the UK (CEO of Salomon Brothers SA, Managing Director of Candover Partners Limites in 2002)

Cyrille Chevrillon is one of the capital investment leaders in France. He is also a teacher affiliated with HEC.


The objective of this center is to conduct research on investment logic and value creation mechanisms of private investors.

An important database on buy-out operations within the US and in Europe was established for this research.

Hall of Fame

logo HEC Hall of Fame

What are the greatest private equity funds of all time? PEI presents the HEC Private Equity Value Creation Hall of Fame and reveals its first entrant

Can you name the most successful private equity fund ever? There are probably a number of GPs reading this who would say ‘yes’ and point to a fund in their own firm’s history which, by at least one metric, is a contender.

But metrics in isolation can be misleading or irrelevant. A fund that produces 3x invested capital and a 30 percent IRR is a stellar performer, but of limited value to a large investor if it is only $150 million in size or if it took huge risks to make those returns.

Oliver Gottschalg, associate professor of strategy at HEC Paris and co-founder of its private equity observatory research centre, discussed this with a client earlier this year.

In Gottschalg’s own words: “I met with Bart Elema, CFO of my client Waterland Private Equity, and he mentioned to me that based on his research in industry specific databases, there were only very few PE funds of a certain size that generated more than 3x net.”

“We had a conversation about what aspects make a PE fund really great, as the simple money multiple is clearly too simplistic: no consideration of risk, time value of money, opportunity costs etc.

“During the conversation I realised that it is not obvious from the outside to spot the ‘best of the best’ of all PE funds of all times… and that this information would be useful for investors and for the asset asset class and a governance structure can be – countering some of the widespread criticism that private equity only levers up equity and rides macro trends.

“It would also give investors some idea about which GPs had been at the top of this ‘game’ over the past 20 years. On the way back from the meeting, I started to sketch out the set of complementary hurdles that a PE fund would have to surpass to deserve the label of being among ‘the best of the best’ at value creation in PE.”

Gottschalg settled on three key hurdles, and the idea of the ‘HEC Private Equity Value Creation Hall of Fame’  was born. To qualify for the Hall of Fame, funds must have generated:

  • at least $2 billion in cash-on-cash alpha gain;
  • “PERACS Alpha”* of at least 15 percent return;
  • at least 2x cash-on-cash multiple.

Gottschalg and his team set about analysing data on realised returns for 2,500 funds and, as Elema predicted, rapidly whittled them down to a handful of exceptional funds.

Here we launch the HEC Private Equity Value Creation Hall of Fame, with its first inductee: Hellman & Friedman Capital Partners IV. Watch out for further admissions in the coming months.

FAQ

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*PERACS Alpha measures value generation in excess of a public market equivalent, with the MSCI ACWI index as reference point.

Articles :

2017 Rankings Report

How Bridge Loans Distort IRRs

Buyout, venture and growth capital investment risk less than expected

The Recipe to PE’s “Secret Sauce”

How to Benchmark Emerging Markets Private Equity Effectively

Top Quartile Status Doesn’t Tell Us Much

The 2015 HEC-DowJones Private Equity Performance Ranking – The Top 30 Performers

HEC-Dow Jones Private Equity Performance Rankings: Which Firms Generated Best Performance for Their Investors Over the Past Years?

David Swensen on the Limitations of the Use of IRR

IRR is an Equal Opportunity Manipulator

Alpha in a Crisis: How Private Equity Perseveres


Videos :

Olivier Gottschalg - 41

HEC - Dow Jones Private Equity Fitness Ranking by Professor Olivier Gottshalg


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