Private Banking Magazin: Private Equity – Four Quality Criteria Beyond the Track Record

Track records remain an important element of private equity fund selection – but in today's market, they are becoming increasingly difficult to interpret.

A significant share of historical track records was generated in an exceptionally favorable environment (2010–2021) with low interest rates, high liquidity and rising valuation multiples. Returns were therefore largely supported by macroeconomic tailwinds, with less need for operational value creation.

In today's market, investors need to look deeper, writes our Managing Director Christopher Bär in a guest article for Private Banking Magazin. The key question centers around what the drivers of past returns really are and how relevant they are in the current environment and going forward.

Four qualitative factors are becoming increasingly decisive:

• Sector specialization: Deep sector focus improves investment decisions, deal access (especially in the lower mid-market) and enables repeatable value creation playbooks.

• Operational capabilities: In‑house operating expertise can improve a manager’s capability of turning strategy into execution and drive sustainable value creation.

• Team stability & decision-making: Clear responsibilities, resilient teams and robust decision processes matter most when markets become challenging.

• Alignment of interests & focus: Meaningful GP commitment and organizational clarity help avoid conflicts and keep decisions aligned with investor interests.

Bottom line: Identifying top private equity managers has become more complex – and access to them remains highly competitive. Long‑term relationships matter more than ever.

Read Article (German)