---
_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'
...
---
_id: '5191'
abstract:
- lang: eng
  text: This study examines the relevance of financial and non-financial information
    for the valuation of venture capital (VC) investments. Based on a hand-collected
    data set on venture-backed start-ups in Germany, we investigate the internal due
    diligence documents of over 200 investment rounds. We document that balance sheet
    and income statement items capture as much economic content as verifiable non-financial
    information (e.g. team experience or the number of patents) while controlling
    for several deal characteristics (e.g. industry, investment round, or yearly VC
    fund inflows). In addition, we show that valuations based on accounting and non-accounting
    information yield a level of valuation accuracy that is comparable to that of
    publicly traded firms. Further analyses show that the industry-specific total
    asset multiples outperform the popular revenue multiples but lead to significantly
    less accurate results than those obtained from the more comprehensive valuation
    models. Overall, our findings might inform researchers and standard-setters of
    the usefulness of accounting information for investment companies and provide
    additional evidence to gauge the overall valuation accuracy in VC settings.
article_type: original
author:
- first_name: Sönke
  full_name: Sievers, Sönke
  id: '46447'
  last_name: Sievers
- first_name: Christopher F
  full_name: Mokwa, Christopher F
  last_name: Mokwa
- first_name: Georg
  full_name: Keienburg, Georg
  last_name: Keienburg
citation:
  ama: Sievers S, Mokwa CF, Keienburg G. The relevance of financial versus non-financial
    information for the valuation of venture capital-backed firms. <i>European Accounting
    Review (VHB-JOURQUAL 4 Ranking A)</i>. 2013;22(3):467-511. doi:<a href="https://doi.org/10.1080/09638180.2012.741051">10.1080/09638180.2012.741051</a>
  apa: Sievers, S., Mokwa, C. F., &#38; Keienburg, G. (2013). The relevance of financial
    versus non-financial information for the valuation of venture capital-backed firms.
    <i>European Accounting Review (VHB-JOURQUAL 4 Ranking A)</i>, <i>22</i>(3), 467–511.
    <a href="https://doi.org/10.1080/09638180.2012.741051">https://doi.org/10.1080/09638180.2012.741051</a>
  bibtex: '@article{Sievers_Mokwa_Keienburg_2013, title={The relevance of financial
    versus non-financial information for the valuation of venture capital-backed firms},
    volume={22}, DOI={<a href="https://doi.org/10.1080/09638180.2012.741051">10.1080/09638180.2012.741051</a>},
    number={3}, journal={European Accounting Review (VHB-JOURQUAL 4 Ranking A)}, publisher={Taylor
    \&#38; Francis}, author={Sievers, Sönke and Mokwa, Christopher F and Keienburg,
    Georg}, year={2013}, pages={467–511} }'
  chicago: 'Sievers, Sönke, Christopher F Mokwa, and Georg Keienburg. “The Relevance
    of Financial versus Non-Financial Information for the Valuation of Venture Capital-Backed
    Firms.” <i>European Accounting Review (VHB-JOURQUAL 4 Ranking A)</i> 22, no. 3
    (2013): 467–511. <a href="https://doi.org/10.1080/09638180.2012.741051">https://doi.org/10.1080/09638180.2012.741051</a>.'
  ieee: 'S. Sievers, C. F. Mokwa, and G. Keienburg, “The relevance of financial versus
    non-financial information for the valuation of venture capital-backed firms,”
    <i>European Accounting Review (VHB-JOURQUAL 4 Ranking A)</i>, vol. 22, no. 3,
    pp. 467–511, 2013, doi: <a href="https://doi.org/10.1080/09638180.2012.741051">10.1080/09638180.2012.741051</a>.'
  mla: Sievers, Sönke, et al. “The Relevance of Financial versus Non-Financial Information
    for the Valuation of Venture Capital-Backed Firms.” <i>European Accounting Review
    (VHB-JOURQUAL 4 Ranking A)</i>, vol. 22, no. 3, Taylor \&#38; Francis, 2013, pp.
    467–511, doi:<a href="https://doi.org/10.1080/09638180.2012.741051">10.1080/09638180.2012.741051</a>.
  short: S. Sievers, C.F. Mokwa, G. Keienburg, European Accounting Review (VHB-JOURQUAL
    4 Ranking A) 22 (2013) 467–511.
date_created: 2018-10-31T11:27:42Z
date_updated: 2026-04-09T07:59:17Z
department:
- _id: '275'
doi: 10.1080/09638180.2012.741051
extern: '1'
intvolume: '        22'
issue: '3'
jel:
- G24
- G32
- M41
keyword:
- value relevance
- equity valuation
- venture capital
- human capital
- start-ups
language:
- iso: eng
main_file_link:
- url: http://www.tandfonline.com/doi/full/10.1080/09638180.2012.741051
page: 467-511
publication: European Accounting Review (VHB-JOURQUAL 4 Ranking A)
publication_status: published
publisher: Taylor \& Francis
quality_controlled: '1'
related_material:
  link:
  - relation: earlier_version
    url: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1449740
status: public
title: The relevance of financial versus non-financial information for the valuation
  of venture capital-backed firms
type: journal_article
user_id: '115848'
volume: 22
year: '2013'
...
---
_id: '5195'
abstract:
- lang: eng
  text: 'This article analyses 336 German venture capital transactions from 1990 to
    2005 and seeks to determine why selected financial securities differ across deals.
    We find that a broad array of financial instruments is used, covering straight
    equity, mezzanine and debt‐like securities. Based on the chosen financial securities’
    upside potential and downside protection characteristics, we provide an explanation
    for the differing use of these securities. Our results show that investors’ deal
    experience, adverse selection risks and economic prospects in the public equity
    market influence the selection of financial securities. '
article_type: original
author:
- first_name: Thomas
  full_name: Hartmann-Wendels, Thomas
  last_name: Hartmann-Wendels
- first_name: Georg
  full_name: Keienburg, Georg
  last_name: Keienburg
- first_name: Sönke
  full_name: Sievers, Sönke
  id: '46447'
  last_name: Sievers
citation:
  ama: 'Hartmann-Wendels T, Keienburg G, Sievers S. Adverse selection, investor experience
    and security choice in venture capital finance: evidence from Germany. <i>European
    Financial Management (VHB-JOURQUAL 4 Ranking B)</i>. 2011;17(3):464-499. doi:<a
    href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">10.1111/j.1468-036X.2010.00568.x</a>'
  apa: 'Hartmann-Wendels, T., Keienburg, G., &#38; Sievers, S. (2011). Adverse selection,
    investor experience and security choice in venture capital finance: evidence from
    Germany. <i>European Financial Management (VHB-JOURQUAL 4 Ranking B)</i>, <i>17</i>(3),
    464–499. <a href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">https://doi.org/10.1111/j.1468-036X.2010.00568.x</a>'
  bibtex: '@article{Hartmann-Wendels_Keienburg_Sievers_2011, title={Adverse selection,
    investor experience and security choice in venture capital finance: evidence from
    Germany}, volume={17}, DOI={<a href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">10.1111/j.1468-036X.2010.00568.x</a>},
    number={3}, journal={European Financial Management (VHB-JOURQUAL 4 Ranking B)},
    publisher={Wiley Online Library}, author={Hartmann-Wendels, Thomas and Keienburg,
    Georg and Sievers, Sönke}, year={2011}, pages={464–499} }'
  chicago: 'Hartmann-Wendels, Thomas, Georg Keienburg, and Sönke Sievers. “Adverse
    Selection, Investor Experience and Security Choice in Venture Capital Finance:
    Evidence from Germany.” <i>European Financial Management (VHB-JOURQUAL 4 Ranking
    B)</i> 17, no. 3 (2011): 464–99. <a href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">https://doi.org/10.1111/j.1468-036X.2010.00568.x</a>.'
  ieee: 'T. Hartmann-Wendels, G. Keienburg, and S. Sievers, “Adverse selection, investor
    experience and security choice in venture capital finance: evidence from Germany,”
    <i>European Financial Management (VHB-JOURQUAL 4 Ranking B)</i>, vol. 17, no.
    3, pp. 464–499, 2011, doi: <a href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">10.1111/j.1468-036X.2010.00568.x</a>.'
  mla: 'Hartmann-Wendels, Thomas, et al. “Adverse Selection, Investor Experience and
    Security Choice in Venture Capital Finance: Evidence from Germany.” <i>European
    Financial Management (VHB-JOURQUAL 4 Ranking B)</i>, vol. 17, no. 3, Wiley Online
    Library, 2011, pp. 464–99, doi:<a href="https://doi.org/10.1111/j.1468-036X.2010.00568.x">10.1111/j.1468-036X.2010.00568.x</a>.'
  short: T. Hartmann-Wendels, G. Keienburg, S. Sievers, European Financial Management
    (VHB-JOURQUAL 4 Ranking B) 17 (2011) 464–499.
date_created: 2018-10-31T11:39:27Z
date_updated: 2026-04-09T08:01:03Z
department:
- _id: '275'
doi: 10.1111/j.1468-036X.2010.00568.x
extern: '1'
intvolume: '        17'
issue: '3'
jel:
- G24
- G32
keyword:
- venture capital
- capital structure
- contract theory
- deal experience
language:
- iso: eng
main_file_link:
- url: https://onlinelibrary.wiley.com/doi/full/10.1111/j.1468-036X.2010.00568.x
page: 464-499
publication: European Financial Management (VHB-JOURQUAL 4 Ranking B)
publication_status: published
publisher: Wiley Online Library
quality_controlled: '1'
status: public
title: 'Adverse selection, investor experience and security choice in venture capital
  finance: evidence from Germany'
type: journal_article
user_id: '115848'
volume: 17
year: '2011'
...