---
_id: '20688'
abstract:
- lang: eng
  text: We offer the first empirical analysis connecting the timing of general partner
    (GP) compensation to private equity fund performance. Using detailed information
    on limited partnership agreements between private equity limited and general partners,
    we find that “GP-friendly” contracts—agreements that pay general partners on a
    deal-by-deal basis instead of withholding carried interest until a benchmark return
    has been earned—are associated with higher returns, both gross and net of fees.
    This is robust to measures of performance persistence, time period effects, and
    other contract terms and is related to exit-timing incentives. Timing practices
    balance GP incentives against limited partner downside protection.
article_type: original
author:
- first_name: Niklas
  full_name: Hüther, Niklas
  last_name: Hüther
- first_name: David T.
  full_name: Robinson, David T.
  last_name: Robinson
- first_name: Sönke
  full_name: Sievers, Sönke
  id: '46447'
  last_name: Sievers
- first_name: Thomas
  full_name: Hartmann-Wendels, Thomas
  last_name: Hartmann-Wendels
citation:
  ama: 'Hüther N, Robinson DT, Sievers S, Hartmann-Wendels T. Paying for Performance
    in Private Equity: Evidence from Venture Capital Partnerships. <i>Management Science
    (VHB-JOURQUAL 4 Ranking A+)</i>. 2019;66(4):1756-1782. doi:<a href="https://doi.org/10.1287/mnsc.2018.3274">10.1287/mnsc.2018.3274</a>'
  apa: 'Hüther, N., Robinson, D. T., Sievers, S., &#38; Hartmann-Wendels, T. (2019).
    Paying for Performance in Private Equity: Evidence from Venture Capital Partnerships.
    <i>Management Science (VHB-JOURQUAL 4 Ranking A+)</i>, <i>66</i>(4), 1756–1782.
    <a href="https://doi.org/10.1287/mnsc.2018.3274">https://doi.org/10.1287/mnsc.2018.3274</a>'
  bibtex: '@article{Hüther_Robinson_Sievers_Hartmann-Wendels_2019, title={Paying for
    Performance in Private Equity: Evidence from Venture Capital Partnerships}, volume={66},
    DOI={<a href="https://doi.org/10.1287/mnsc.2018.3274">10.1287/mnsc.2018.3274</a>},
    number={4}, journal={Management Science (VHB-JOURQUAL 4 Ranking A+)}, author={Hüther,
    Niklas and Robinson, David T. and Sievers, Sönke and Hartmann-Wendels, Thomas},
    year={2019}, pages={1756–1782} }'
  chicago: 'Hüther, Niklas, David T. Robinson, Sönke Sievers, and Thomas Hartmann-Wendels.
    “Paying for Performance in Private Equity: Evidence from Venture Capital Partnerships.”
    <i>Management Science (VHB-JOURQUAL 4 Ranking A+)</i> 66, no. 4 (2019): 1756–82.
    <a href="https://doi.org/10.1287/mnsc.2018.3274">https://doi.org/10.1287/mnsc.2018.3274</a>.'
  ieee: 'N. Hüther, D. T. Robinson, S. Sievers, and T. Hartmann-Wendels, “Paying for
    Performance in Private Equity: Evidence from Venture Capital Partnerships,” <i>Management
    Science (VHB-JOURQUAL 4 Ranking A+)</i>, vol. 66, no. 4, pp. 1756–1782, 2019,
    doi: <a href="https://doi.org/10.1287/mnsc.2018.3274">10.1287/mnsc.2018.3274</a>.'
  mla: 'Hüther, Niklas, et al. “Paying for Performance in Private Equity: Evidence
    from Venture Capital Partnerships.” <i>Management Science (VHB-JOURQUAL 4 Ranking
    A+)</i>, vol. 66, no. 4, 2019, pp. 1756–82, doi:<a href="https://doi.org/10.1287/mnsc.2018.3274">10.1287/mnsc.2018.3274</a>.'
  short: N. Hüther, D.T. Robinson, S. Sievers, T. Hartmann-Wendels, Management Science
    (VHB-JOURQUAL 4 Ranking A+) 66 (2019) 1756–1782.
date_created: 2020-12-08T13:19:35Z
date_updated: 2026-04-09T08:27:26Z
department:
- _id: '275'
doi: 10.1287/mnsc.2018.3274
intvolume: '        66'
issue: '4'
keyword:
- venture capital
- compensation
- private equity
- VC partnership
- pay-performance relation
language:
- iso: eng
main_file_link:
- url: https://pubsonline.informs.org/doi/10.1287/mnsc.2018.3274
page: 1756-1782
publication: Management Science (VHB-JOURQUAL 4 Ranking A+)
publication_identifier:
  issn:
  - 0025-1909
  - 1526-5501
publication_status: published
quality_controlled: '1'
related_material:
  link:
  - relation: supplementary_material
    url: https://pubsonline.informs.org/doi/suppl/10.1287/mnsc.2018.3274/suppl_file/mnsc.2018.3274.sm1.pdf
  - relation: other
    url: https://corpgov.law.harvard.edu/2018/01/13/paying-for-performance-in-private-equity-evidence-from-vc-partnerships
  - relation: earlier_version
    url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3087320
status: public
title: 'Paying for Performance in Private Equity: Evidence from Venture Capital Partnerships'
type: journal_article
user_id: '115848'
volume: 66
year: '2019'
...
---
_id: '5185'
abstract:
- lang: eng
  text: 'We offer the first empirical analysis connecting the timing of general partner
    (GP) compensation to private equity fund performance. Using detailed information
    on limited partnership agreements between private equity limited and general partners,
    we find that "GP-friendly" contracts - agreements that pay general partners on
    a deal-by-deal basis instead of withholding carried interest until a benchmark
    return has been earned - are associated with higher returns, both gross and net
    of fees. This is robust to measures of performance persistence, time period effects,
    and other contract terms, and is related to exit-timing incentives. Timing practices
    balance GP incentives against limited partner downside protection. '
author:
- first_name: Niklas
  full_name: Hüther, Niklas
  last_name: Hüther
- first_name: David
  full_name: Robinson, David
  last_name: Robinson
- first_name: Sönke
  full_name: Sievers, Sönke
  last_name: Sievers
- first_name: Thomas
  full_name: Hartmann-Wendels, Thomas
  last_name: Hartmann-Wendels
citation:
  ama: 'Hüther N, Robinson D, Sievers S, Hartmann-Wendels T. Paying for Performance
    in Private Equity: Evidence from VC Partnerships. <i>SSRN Electronic Journal</i>.
    2017. doi:<a href="https://doi.org/10.2139/ssrn.3087320">10.2139/ssrn.3087320</a>'
  apa: 'Hüther, N., Robinson, D., Sievers, S., &#38; Hartmann-Wendels, T. (2017).
    Paying for Performance in Private Equity: Evidence from VC Partnerships. <i>SSRN
    Electronic Journal</i>. <a href="https://doi.org/10.2139/ssrn.3087320">https://doi.org/10.2139/ssrn.3087320</a>'
  bibtex: '@article{Hüther_Robinson_Sievers_Hartmann-Wendels_2017, title={Paying for
    Performance in Private Equity: Evidence from VC Partnerships}, DOI={<a href="https://doi.org/10.2139/ssrn.3087320">10.2139/ssrn.3087320</a>},
    journal={SSRN Electronic Journal}, author={Hüther, Niklas and Robinson, David
    and Sievers, Sönke and Hartmann-Wendels, Thomas}, year={2017} }'
  chicago: 'Hüther, Niklas, David Robinson, Sönke Sievers, and Thomas Hartmann-Wendels.
    “Paying for Performance in Private Equity: Evidence from VC Partnerships.” <i>SSRN
    Electronic Journal</i>, 2017. <a href="https://doi.org/10.2139/ssrn.3087320">https://doi.org/10.2139/ssrn.3087320</a>.'
  ieee: 'N. Hüther, D. Robinson, S. Sievers, and T. Hartmann-Wendels, “Paying for
    Performance in Private Equity: Evidence from VC Partnerships,” <i>SSRN Electronic
    Journal</i>, 2017.'
  mla: 'Hüther, Niklas, et al. “Paying for Performance in Private Equity: Evidence
    from VC Partnerships.” <i>SSRN Electronic Journal</i>, 2017, doi:<a href="https://doi.org/10.2139/ssrn.3087320">10.2139/ssrn.3087320</a>.'
  short: N. Hüther, D. Robinson, S. Sievers, T. Hartmann-Wendels, SSRN Electronic
    Journal (2017).
date_created: 2018-10-31T10:48:46Z
date_updated: 2022-01-06T07:01:41Z
department:
- _id: '275'
doi: 10.2139/ssrn.3087320
jel:
- G10
- G23
- G24
keyword:
- venture capital
- compensation
- private equity
- VC partnership
- pay-performance relation
language:
- iso: eng
publication: SSRN Electronic Journal
status: public
title: 'Paying for Performance in Private Equity: Evidence from VC Partnerships'
type: journal_article
user_id: '64756'
year: '2017'
...