Here's a startling analysis of the investment returns and cost of capital for the "best and the brightest" owners of private companies--private equity fund managers and their wealthy individual and institutional investors: you've lost a ton of money since 2002 and you may be running out of cash. A negative cashflow of over $250 billion, to be precise. Perhaps a CD at a local bank would have been a better strategy? What does this mean for an industry that, as Rob Slee and John Paglia report in their Pepperdine Private Capital Markets Survey, routinely predicts returns of over 20%?
Though the news so far in 2011 seems closer to breakeven, Pitchbook, the leading provider of information on private capital markets and deals, offers this analysis in their latest news release: