A New Approach to Modeling Private Equity Portfolios
GroveStreet advisor and Harvard Business School professor, Josh Lerner and his team of research colleagues have developed a new, simulation-based private equity forecasting model. The approach preserves the simplicity and intuition of the widely used, decades old deterministic model pioneered by Dean Takahashi and Seth Alexander at Yale, while addressing some of its shortcomings. An abstract on the new model can be found on the HBS website, which includes a link to the full article in the Journal of Portfolio Management.
GroveStreet collaborated with Josh’s team to put the new model into practice for investors. Combining GroveStreet’s two decades of private equity experience and data with the new forecasting model, we jointly developed a highly customizable tool that provides allocators with a probabilistic range of outcomes rather than point estimates for how their private equity programs may develop. The approach affords decision-makers broader perspective and deeper insights about how their portfolios may evolve. Click here for a video that describes the model and our collaboration in more detail.
