Tim Jenkinsons's webpage

Link to paper

Size, returns, and value added: Do private equity firms allocate capital according to manager skill?

Abstract
Private equity (PE) organizations have strong incentives to increase fund and deal sizes. Employing a unique manager-deal matched dataset we find that increased scale has resulted in lower relative returns and waning performance persistence. We propose a new measure of PE gross value added (GVA) that accounts for scale. The measure shows persistence at the fund and manager level. PE organizations have an important role to play in minimizing the impact of scale on relative returns, and so increase GVA, as funds grow by allocating more capital to skilled managers. Around one-third of GVA stems from such capital allocation decisions.