Authored by Kroll experts Paul J. Viscio and George M. Pushner, this handbook offers a clear and authoritative perspective on how value is truly created in private equity (PE). Drawing on more than a decade of research and over one hundred attribution studies, the authors present a rigorous and intuitive framework that moves beyond traditional models. This handbook serves as an essential guide for anyone seeking deeper insight into how PE builds better businesses.
- Today’s challenging markets drive a growing demand from LPs for deeper insights into the nature of the value created by PE GPs.
- The conventional attribution model or "Value Bridge", is inadequate and fundamentally flawed in identifying alpha.The Kroll framework, developed over a decade and proven across more than 100 attribution studies, offers a comprehensive and intuitive look under the hood for greater transparency into GP-driven operational and/or strategic value add. The Kroll framework provides a refined and robust value-attribution approach that can identify and quantify alpha — meaning superior organic value creation at the enterprise level, which addresses the question of whether value has been created through building better businesses.
- The framework expands on the historical approach by drilling down to fundamental market-, industry- and company-specific value-change factors, both organic and acquired through purchase. It then quantitatively maps organic created value to four fundamental sources: industry/sector, beta or capital markets, deleveraging and alpha or unique.
- The handbook provides a step-by-step guide to applying the framework, including a detailed illustrative working example woven throughout the chapters.
- The handbook presents observations on value creation in PE investments based on more than one hundred studies to date, with potential implications for PE fund managers and investors.
- The handbook also covers frequently asked questions.
- The handbook is a must-read for both GPs and LPs who want to gain insight into the sources of created value in their PE investments.
