Analytics
12 Dimensions of Skill across Performance, Strategy and Risk.
Our framework goes beyond IRR and multiples. It isolates genuine manager skill, explains where value is created and quantifies the risks behind the returns.
Performance
01–05
Measures how far a fund has outperformed public markets and comparable private equity funds, how consistently, and why.
01
Outperforming Public Markets & PME Alpha
The GPI Annual Rate of Return (GPI RR) avoids the biases that can distort a standard internal rate of return (IRR). Using it, we isolate the part of a fund’s performance that cannot be attributed to broad market trends.
We then quantify how much of this outperformance comes from financial leverage, sector choices and operational outperformance.
02 · 03
Outperforming Private Markets & Consistency of Outperformance
We benchmark each fund against its empirically derived Relevant Peers. To do this, we compare the characteristics of the fund’s underlying investments with the investment choices of other private equity funds.
This measures the degree of competitive overlap between funds. It lets us identify the funds that overlap significantly with the client fund, and then benchmark the client fund against the aggregate performance of those peers, weighting each peer by its degree of overlap.
04 · 05
Sources of Value & Valuation Diagnostics
Our value-driver analysis breaks performance down into components based on PME Alpha, which avoids the biases of IRR. It separates value created through revenue growth, margin expansion, multiple expansion, currency effects and deleveraging.
Comparing the components of PME Alpha also gives an indication of how conservative valuations are.
Strategy
06–09
Quantifies the strategic drivers behind a manager’s performance.
06 · 07 · 08 · 09
Identifying Strategic Distinctiveness
We quantify the key strategic drivers of a private equity manager’s performance, including:
Distinctiveness. How far investments differ from mainstream private equity in timing (at acquisition and at exit), size, geography and industry.
Deal flow. Evidence of stable, proprietary deal flow.
Consistency. How consistently the investment strategy has been applied over time.
Risk
10–12
Looks behind the average return to show how stable it is and how a portfolio behaves under stress.
10 · 11 · 12
Downturn Resilience, Return Stability & Risk Mitigation
We calculate a proprietary risk measure for private equity portfolios and show the distribution and dispersion of returns graphically, against benchmarks.
We also measure a portfolio’s downturn resilience: its ability to navigate contractions in public markets.
Delivery
Analysed at every level of the portfolio.
We report the dimensions for each investment, each fund and the portfolio as a whole.
Investment level
Every individual deal
Performance dimensions (01–05) for each investment made by each fund we analyse.
Fund level
Every fund
All 12 dimensions for each fund we analyse.
Portfolio level
All funds together
All 12 dimensions for the combined portfolio, when we analyse more than one fund.
Realised and unrealised
See both sides of the track record
To contrast the realised and unrealised parts of a portfolio, we provide the performance dimensions three ways:
Related services
From analysis to communication
Where relevant, we also help put the results to work:
- Staff training, and support and advice on internal communication
- Marketing materials, including the private placement memorandum (PPM), a Performance Highlights pitch deck and video
- Investor communication webinars
- Media relations support