Private Equity in the U.S.

This paper investigates the nature of private equity fund performance, and empirically looks for evidence for effects of business cycle on this measure. The data on the U.S. private equity market is examined to arrive at a comprehensive answer to a question of importance to investors with a long-term horizon and a tolerance for illiquidity: does investing in private equity save investors the struggle of going through years of low performance when the business cycle is not in their favor? This thesis finds no evidence of direct influence of GDP growth on private equity fund performance. The paper does however find leads for the influence of both interest rates and fund size on abnormal returns. This in turn implies very interesting grounds for further research into the field of private equity investment and business cycles