The ‘fittest’ private equity firms

May 17, 2011, 11:15 PM UTC

Which private equity firm is the “fittest” of them all?

That’s the question approached each spring by Oliver Gottschalg, an associate professor of strategy and business policy at the HEC School of Management in Paris. In partnership with Dow Jones, Gottschalg has developed a ranking to determine which private equity firms are most likely to be the top performers going forward:

“It evaluates each firm’s competitive positioning based on 10 different empirically validated criteria and then derives an overall future competitiveness score based on the historic link between firm performance and each of these criteria. Collectively, these criteria capture some of the most relevant drivers of value creation, including scale, quality of deal flow, ability to time debt and equity markets, and strategic positioning.”

The latest rankings find Silver Lake Partners and Warburg Pincus tied atop the rankings, with “fitness scores” of 3.0.

They are followed by Nordic Capital (2.3), Bain Capital (1.8), Doughty Hanson (1.7), TPG Capital (1.7), The Carlyle Group (1.6), AXA Private Equity (1.4) and Goldman Sachs (1.4).

Last year’s list was led by AXA Private Equity, followed by CDC Enterprises Equity Capital, Providence Equity Partners, Goldman Sachs Capital Partners and TPG Capital.

Gottschalg evaluated 225 private equity firms, representing more than 1,000 funds with more than $1 trillion in committed capital. Factors evaluated include scale of current activities, demonstrated ability to invest counter-cyclically, level of strategic uniqueness and exit timing.