Ep34 “Why Has Private Equity Grown So Much?” with Eric Zinterhofer

Measurement Issues

Jules van Binsbergen raises the issue of performance measurement in private equity, noting the lack of high-frequency return data and market prices. Eric Zinterhofer explains that this makes it extremely difficult to hold private equity firms accountable against benchmarks. He emphasizes the noise in the data and suggests focusing on metrics like multiple uninvested capital and DPI to gauge performance more objectively 1.

   

Valuation Reliability

Eric discusses the reliability of private equity valuations, especially during high valuation environments. He points out that recent aggressive investments may face significant markdowns, questioning the accuracy of current valuations. Jonathan Berk suggests a potential day of reckoning for the industry due to these valuation challenges 2 3.