VC&PE Week 3 Discussion Quiz Game (Spring '26)

“Unpacking Private Equity Performance” Brown & Volckmann (2024)

According to the authors, subscription lines of credit can severely distort which of these performance metrics?

• MOIC

• IRR

• TVPI

• PME

“Unpacking Private Equity Performance” Brown & Volckmann (2024)

In the simulated fund analysis, fast deployment tends to produce a higher net IRR early in fund life because:

• It eliminates management fees

• It compresses carry to zero

• Managers can use the funds to buy private jets

• Fees are smaller relative to deployed capital earlier in the fund’s life

“Unpacking Private Equity Performance” Brown & Volckmann (2024)

Why can recycling can distort fund performance?

• There is a universally accepted accounting method for recycled capital and it biases performance upwards

• Recycled gains are always excluded from performance calculations

• Different accounting treatments can produce materially different IRR and MOIC outcomes

• Recycling does not distort fund performance at all

“Has Private Equity Outperformed Public Equity?” Lester, O'Shea, and Warren (2025)

Why do the authors prefer to use direct alpha?

• It measures the simple terminal value of the investor's wealth

• It calculates leverage adjusted returns

• It shows the annual outperformance of a private fund relative to an index

• It doesn't take time value of money into account

“Has Private Equity Outperformed Public Equity?” Lester, O'Shea, and Warren (2025)

Which of the following is NOT one of the key adjustments the authors make to public-equity benchmarks?

• Geography

• Subindustry composition

• Time-varying leverage

• Inflation rates

“Has Private Equity Outperformed Public Equity?” Lester, O'Shea, and Warren (2025)

Why do pooled and mean direct alphas differ?

• Pooled measures weight recent and larger vintages more heavily, while means weight each vintage equally

• Mean direct alpha ignores fees

• Pooled direct alpha only applies to venture capital

• Mean direct alpha only applies to buyout

“Chasing Shadows: Predicting Outperformers in Private Assets” Han, Klein, Ramirez, and Yuan (2025)

According to the authors, why are contemporaneous IRRs for in-flight funds unreliable?

• They are based partly on NAV estimates that are not yet realized

• They exclude fees and carry

• They are calculated from daily liquid market prices

• They only apply to evergreen funds

“Chasing Shadows: Predicting Outperformers in Private Assets” Han, Klein, Ramirez, and Yuan (2025)

The authors find that the reliability of performance measurement improves most when:

• A new fund is launched

• The GP submits NAV multiples to the investors

• The LPs review fund disclosures with their lawyers

• The fund has made meaningful distributions

“Chasing Shadows: Predicting Outperformers in Private Assets” Han, Klein, Ramirez, and Yuan (2025)

The authors find that final performance within the same manager shows what persistence patterns?

• Some persistence

• Strong persistence

• No persistence

• Persistence only in public markets