Cambridge Associates' Auerbach Expects PE Market to Keep Outperforming

The video discusses private equity's performance, highlighting its 13% annualized return compared to the S&P 500's 9%. It explains the internal rate of return and how it can be manipulated through early exits and commitment facilities. The role of low interest rates in enabling leverage and high valuations is examined. Valuation challenges for private companies are addressed, using methods like discounted cash flow and market comparables. The video also explores political and market dynamics affecting private equity, including increased transparency and attention from public investors.

What factors contribute to the outperformance of private equity compared to public market indices?

How does the internal rate of return differ from other metrics in private equity?

What role do low interest rates play in the private equity market?

What are some challenges in valuing private companies compared to public companies?

How has the political environment affected perceptions of private equity?

In what ways are public investors shifting their strategies towards private equity?

What are the implications of increased transparency in private equity since the global financial crisis?