What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. Instead, PE investors typically target a 22% internal rate of return on their investments on average (with the vast majority of target rates of return between 20 and 25%), a return that appears to be above a CAPM-based rate. We gather career history data for the founders of all 76 private equity firms in our survey.

CAPM 12