Private Equity Performance Numbers May Undermine Credibility

Internal rate of return (IRR), the key performance measure of private equity firms, is at the risk of being “massaged in a way that undermines the industry’s credibility and adds dangers when a downturn comes,” according to a recent article in The Wall Street Journal. The IRR, the article explains, is based on a complex set of numbers tied to fund cash flows but the increased use of bridge financing by firms (borrowing money to… Read More