What Returns Do Private Equity Firms Really Generate?

About the Episode

Jeff Hooke returns to M&A Talk to discuss the world of private equity and the truth about returns from private equity fund investments. He digs into the private equity markets, highlighting the fact that the PE industry does not beat the public market despite what investors want you to think. Jeff discusses pension funds, private equity funds vs. the public market, the gold standard for institutional investment funds, and tips, advice, and book recommendations from Wall Street history to the Old West.

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In this Episode

1:04 How has Jeff Hooke’s exposé book, The Myth of Private Equity, made any enemies for him?
4:14 Is there a big disconnect between the academic world and practitioners in the private equity world?
9:55 What are the three major parts of the private equity industry?
13:00 What influences the performance of private equity-held firms compared to public firms?
16:10 How long does it take to sell a private equity fund?
20:20 How is a typical pension fund structured?
27:34 How does bankruptcy work for a pension fund?
32:04 What are the implications of institutional investors controlling the public market?
38:28 Where do family offices tend to invest their funds?
41:25 Does private equity add value to the business community?
43:33 Do private equity firms provide significant value to smaller companies that have not instituted the private equity toolkit in the lower middle market?
45:34 What are your thoughts on angel capital?
46:15 Book recommendations – from Wall Street history to the Old West to the war in Iraq
52:26 What are the patterns of human behavior in the business world?

Resources Mentioned

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Meet Our Guest

Jeff Hooke

Jeff Hooke

Senior Finance Lecturer at Johns Hopkins Carey Business School

Jeff Hooke is a senior finance lecturer at the Johns Hopkins Carey School of Business. Earlier, he was a managing director at Focus, LLC, an investment bank serving middle-market companies. Previously, he was a director of Emerging Markets Partnership (a $5 billion private equity fund), a principal investment officer of the World Bank Group, and an investment banker with Lehman Brothers.

Jeff has been quoted widely in the business media. He is the author of five books on the world of finance. He has co-authored several peer-reviewed academic papers on finance and has written many position papers for non-profit think tanks on a pro bono basis. He holds an MBA from the Wharton School and a BS from the University of Pennsylania.

Location Location: Baltimore, MD, Washington, D.C

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