Private Equity: You Make Money When You Buy

This graph is a good reminder that you make money when you buy. The top 25% of private equity buyout performers were able to enter investments at lower purchase multiples than their lower-performing peers, highlighting the importance of discipline at the point of acquisition. In private equity, the price paid can have a significant impact on eventual returns. Notably, the managers who bought at the lowest multiples delivered an impressive 5.5x MOIC. 

Source: SPI by StepStone, McKinsey Analysis; 75th percentile MOIC by PPM quartile

This graph was produced by Lucas Juery, CFA, CFPⓇ and is not intended to provide financial advice.