// Private Equity Fund Selection

Overcome the limitations of IRRs and peer benchmarking to gain deeper insight into manager skill and performance attribution.

Access objective, comparable insights.

Private equity fund returns can be highly sensitive to vintage years, cash flow timing, reinvestment assumptions, and individual transactions. All of this makes it difficult to parse the impacts of skill versus chance.

Off-the-shelf rankings and performance statistics can be particularly misleading and uninformative for PE funds. Thankfully, innovative and effective evaluation methods do exist — but they can be complex and time-consuming to implement.

Empirically can help you apply customized, cutting-edge analytics to your private equity selection process, and understand which teams possess repeatable outperformance abilities. Together with your other diligence efforts, you'll gain the conviction you need to make multi-year fund commitments with confidence.

Private Equity Fund Analytics Suite

Leveraging advanced technology, proprietary data, and deep expertise to support clients' selection and review efforts.

EPSE

Advanced strategy simulation with complex constraints.

Replicator

Decomposition, replication and substitution of return sources.

Premortem

Flexible scenario analysis, decision modeling and risk evaluation.

Key Diligence Questions

Select a topic area to view examples of the types of questions we can answer, after customization to the case at hand, to support review and evaluation processes.

  • Manager Evaluation

    • Has a manager demonstrated evidence of a repeatable process for generating attractive private equity returns?
    • How can funds with different focuses (i.e. industry, region, size) and unequal vintages be compared in an apples-to-apples way?
    • How was performance generated? How much of performance can be attributed to the attractiveness of the market conditions available at the time?
  • Timing Considerations

    • How reliant is a PE manager's value creation ability on the presence of particular market conditions or macroeconomic environments?
  • Cost, Value and Liquid Alternatives

    • What is the Best Liquid Alternative™ (such as an ETF or custom index) available for this strategy? How does its risk and net-of-fee return profile compare?
    • What is the estimated probability that the PE fund will underperform its Best Liquid Alternative over its life?
    • How unique are the performance characteristics being offered by this manager, versus available alternatives? How valuable are they as a component of the broader portfolio?
  • ESG and Non-Financial Priorities

    ESG monitoring and integration in private equity remains undeveloped compared to the public equity space. Review our ESG Capabilities for more detail about how we can help you rigorously address considerations related to:

    • Responsible investment
    • Climate change
    • Manager diversity
    • Sharia compliance
    • Other custom priorities
  • Integrative Decision Making

    • Which candidate strategy achieves the best balance between multiple competing objectives?
    • Which PE fund offers strong long-run return potential while minimizing the risk of significant negative skewness?
    • Which allocation choice is most robust across broad ranges of uncertain variables, such as macroeconomic conditions?
    • How would the conclusions change if the weights of the decision criteria were different?

Featured Insight //

Robust Private Equity Performance Metrics

We discuss the problems with unstable return metrics and outline the key elements of our solution for evaluating PE funds.

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More Than Just Private Equity

Explore how we power better due diligence across multiple asset classes.

Next STEP Read about the advanced technology behind Empirically's capabilities, or book an introductory discussion.