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

Harvard Business Review

For instance, despite the prominent role that discounted cash flow valuation methods play in academic finance courses, few PE investors use discounted cash flow or net present value techniques to evaluate investments. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. We gather career history data for the founders of all 76 private equity firms in our survey.