The Pulse of Private Equity – 10/15/2018

Are SBOs a drag on fund performance?


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Secondary buyouts are one of the most critiqued aspects of the private equity industry. But SBOs aren’t going anywhere, and they represent one of the largest deal sourcing opportunities in today’s market. Still, it’s worthwhile to investigate the wisdom of buying “used” portfolio companies, since PE’s justification is tethered to operational improvements. Our analyst team set out to quantify the SBO question on a fund returns level by identifying SBO-heavy funds and comparing their performance to their broader peer groups.