Private Equity Return Calculator
The formula
What the private equity return tells you
Exactly what private equity return earned: total return, the annualised CAGR that makes it comparable, and the split between price gain and income.
Calculation: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Enter your inputs and every substitution is shown below the result.
Reading the result
Compare with the boring alternative over the same window — the verdict bands anchor to long-run market returns; income-heavy gains are usually steadier than price-only ones.
Rules of thumb: Long-run real equity return sits near 6–7 % nominal CAGR plus inflation; bonds run 2–4 points lower.
Limitations and best practice
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value.
This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Frequently asked questions
Why does CAGR differ from average yearly return?
Are taxes included?
Source & methodology
Time-weighted return arithmetic per CFA Institute conventions.
Private Equity Return: the number, the method and the caveats
Capital decisions deserve better than a gut feeling — this page gives you the arithmetic to defend one. There are plenty of pages about Private Equity Return; almost none of them show the working. This one does: the formula, every input, a fully computed example, and a sensitivity analysis calculated live from this engine’s own defaults.
What makes Private Equity Return worth calculating is not precision but position: it tells you which side of a threshold you are on, and by how much. A rough figure that settles the direction beats an elaborate one that never commits.
The number itself is the easy part. What takes judgement is knowing which inputs are facts in your situation and which are guesses wearing a decimal point — a distinction this page makes explicit for every field above.
What makes a calculation page trustworthy is that its copy is derived from its own arithmetic: here total return = 38.63%, recomputed every time a field changes, and the sensitivity section ranks the inputs that move the result — Buy price / invested first, at ≈39.9 % of the headline for a ten-percent error either way in that input — which is the thread the rest of this guide pulls on.
Every input in Private Equity Return, and what it does to the answer
Here is the complete model this tool runs — Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 — with each input explained below. If a competitor’s page gives you a different answer from the same inputs, this is the text that settles which of you is right.
Buy price / invested ($) (example value 23,000) is a measured number in the unit named by the label; the formula does not convert for you. Keep every money input in the same currency; mixing systems quietly corrupts the comparison.
Sell price / value now ($) (example value 31,250) is a numeric input whose unit is fixed by the label; a wrong unit is a wrong answer wearing a plausible disguise. If your source quotes a figure before and after some deduction, decide which one the formula wants and be consistent for every field.
Holding period (years) (example value 9) is a quantity rather than a category — precision here is cheap and worth having. Be precise about the boundary (exact date, start of month); time inputs decide the exponent in most formulas.
Income received over the hold ($) (example value 635) is a plain measured quantity — the unit shown in the label is the unit the formula expects. Keep every money input in the same currency; mixing systems quietly corrupts the comparison.
A fully worked Private Equity Return example
Abstract formulas are hard to trust, so here is the complete substitution using the default inputs, written the way an examiner would want it. Starting figures: Buy price / invested ($), Sell price / value now ($), Holding period (years), Income received over the hold ($). Run to the end, the total return resolves to 38.63% — Modest gain — check it after inflation and costs on the bands this tool uses.
- Ending value incl. income = $31,250.00 + $635.00 = $31,885.00
- Total return = (31,885.00 − 23,000.00) ÷ 23,000.00 = 38.63 %
- CAGR = (31,885.00 ÷ 23,000.00)^(1/9.0) − 1 = 3.70 % a year
Annualised (CAGR) — 3.70%. Read next to the headline, this is the figure that shows the shape of the trade-off.
Net profit — $8,885.00. This is the number experienced users quote when the headline alone would mislead.
Value multiple — 1.39 ×. Compare it against the main result of 38.63% before drawing conclusions.
Income share of gain — 7.1%. If your inputs change, this is usually the first companion figure to move.
Keep this worked example open while you enter your own figures: matching the shape of the substitution is the fastest way to spot a unit or convention mistake.
Scenario table: Private Equity Return at ±10 % and ±20 % of the key input
Read this table as the practical error bar on the headline figure. It answers the question people actually have after seeing a single number: how wrong could this be if the main input is off by ten or twenty percent?
| Buy price / invested setting | Total return |
|---|---|
| 80 % of the example value | 73.29% |
| 90 % of the example value | 54.03% |
| example inputs | 38.63% |
| 110 % of the example value | 26.03% |
| 120 % of the example value | 15.53% |
Across 5 settings of Buy price / invested, the result spans 15.53% to 73.29%. A decision that only works at one row of this table is a decision waiting for an input to move. Reproduce it in the form above by editing Buy price / invested alone; the substitution steps will follow your figures exactly.
The levers behind Private Equity Return, ranked by effect
This list was computed for this specific engine just now: each numeric input was nudged ±10 % while every other field held its example value, and the total return was recalculated from scratch. It is the fastest honest answer to “what matters most in Private Equity Return?” — and it is specific to these defaults, because sensitivity moves with the starting point.
- Buy price / invested: ten percent up gives 26.03%, ten percent down gives 54.03% — ≈39.9 % of the total return either way
- Sell price / value now +10 % → Private Equity Return = 52.22% · −10 % → 25.04% (the total return shifts ≈35.2 %)
- Income received over the hold +10 % → Private Equity Return = 38.91% · −10 % → 38.35% (the total return shifts ≈0.7 %)
Buy price / invested is the dominant lever here: ten percent either way moves the result by about 39.9 %, from 26.03% to 54.03%. Measure that input from a document rather than from memory, and treat Sell price / value now as the second priority (≈35.2 % per ten percent). The rest of the inputs earn only a rounding-error of attention, and that asymmetry is the practical payoff of measuring rather than asserting.
What a Private Equity Return of 38.63% means in practice
A number on its own is trivia; a number against a range is intelligence. The default case lands in the “Modest gain — check it after inflation and costs” band, and bands are deliberately wide because real situations overlap. The sensitivity list shows how far a modest input error moves you along that ladder: for Buy price / invested, ±10 % covers 26.03% to 54.03%. The practical reading rules: read the band as a starting hypothesis, then test it: change the two dominant inputs by ten percent and see whether the verdict survives. Verdicts that survive stress are the ones worth acting on.
Where Private Equity Return sits next to similar measures: this tool answers “how much is the Private Equity Return”, while the related calculators answer “what do I do about it”. Reading the result alone tends to over-weight a single snapshot; pairing it with the companion tools above turns the number into a decision.
Common mistakes with Private Equity Return (and the fix)
Ignoring the timing of income (reinvested vs spent) can overstate a CAGR by a few tenths; dividends spent as cash belong outside the ending value. This calculator gives an estimate based on standard formulas; it is not professional financial, medical, legal or engineering advice. Verify anything you plan to act on with a qualified professional and your own records.
Reporting the headline and quietly discarding Annualised (CAGR). The companions are where the shape of the trade-off survives the rounding.
Attention is also misallocated between fields. Having measured this engine, we can say where it belongs: Buy price / invested first, everything else second.
The subtlest error is answering the wrong question precisely. Confirm that total return is actually the quantity your decision needs — the arithmetic is flawless either way, which is what makes the mistake invisible.
Private Equity Return verification checklist
- Verify each input against its original source document, not memory.
- Compare the result with one independent method or published benchmark.
- Check Buy price / invested before anything else: it is the measured dominant input, ≈39.9 % of Private Equity Return per ten percent.
- Note the date and the inputs beside the number so the figure can be audited later.
- Re-run the calculation with a ±10 % stress on the two most sensitive inputs.
- Repeat the ±10 % test on the inputs that matter and see whether the decision — not just the number — still holds.
Five steps from raw inputs to a figure you can defend
The tool does the arithmetic; the routine below is what makes the arithmetic trustworthy. Five steps, a minute total — and afterwards you will know not just what the number is, but which assumption produced it.
Step 1 — start from evidence. The inputs behind Private Equity Return are buy price / invested ($), sell price / value now ($), holding period (years), income received over the hold ($). Write them down with their source next to each one; if you cannot name where a figure came from, that is the input most likely to be wrong. The inputs are the part of the work that nobody else can do for you.
Step 2 — compute the version you would not be embarrassed by. If a stranger audited your inputs, which set would you hand over? Enter that set, read the result, and treat everything else as upside. Rounding early is the quietest way to introduce a permanent error.
Step 3 — play with the inputs on purpose. Ten percent up, ten percent down, one field at a time. Within a few minutes you will know this calculation better than most people who quote its results. Repeating a calculation with the same numbers proves only that the arithmetic is reliable — which is worth knowing.
Step 4 — ask what would have to be true. Take the result you want and work backwards through the inputs until you find the assumption that produces it; then decide honestly whether that assumption is defensible. Repeating a calculation with the same numbers proves only that the arithmetic is reliable — which is worth knowing.
Step 5 — save the story with the figure. A number without its inputs and its date is unusable within a quarter. Record 38.63%, the assumptions behind it, and today’s date; your future self will be auditing a stranger’s arithmetic. If the answer changes your behaviour, it deserves a second run with different assumptions.
The real-world conversations Private Equity Return settles
Numbers earn their keep in conversations, and Private Equity Return is no exception. In Investing & Markets discussions around Alternative Investments, this figure decides whether an option stays on the table: it converts an opinionated debate into an arithmetic one, and arithmetic is the only referee both sides accept. If the answer changes your behaviour, it deserves a second run with different assumptions.
Professionals in Alternative Investments use this style of calculation as a screening filter before spending real money or effort: a quick Private Equity Return check eliminates weak options in minutes, and the survivors earn the deeper, slower analysis. The inputs are the part of the work that nobody else can do for you.
Nothing here is stored or transmitted, so the habit of checking is free: open the page, re-enter current figures, compare with the number you saved last time. Rounding early is the quietest way to introduce a permanent error.
Quick answers: what searchers ask about Private Equity Return
What affects Private Equity Return the most?
Measured on this engine, Buy price / invested is the dominant lever: moving it ±10 % shifts the total return across 26.03% to 54.03% — about 39.9 % of the headline, with Sell price / value now next at ≈35.2 %. The ranked list in the sensitivity section is computed live, not asserted from a template.
Which matters more: sell price / value now or buy price / invested?
Buy price / invested, by a factor of about 1.1. Concretely: ten percent on Buy price / invested is worth ≈39.9 % of Private Equity Return, the same nudge on Sell price / value now only ≈35.2 %. That ranking is re-computed for each page from that page’s own defaults.
What is a typical Private Equity Return?
With the example inputs on this page the result is 38.63%, labelled “Modest gain — check it after inflation and costs”. “Typical” varies with situation, which is why every result here ships with its verdict band and its sensitivity list: they turn one figure into a range you can locate yourself inside.
How do I calculate Private Equity Return by hand?
Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 is the entire method. Work the inputs in that order — Ending value incl. income = $31,250.00 + $635.00 = $31,885.00 — and you will reach 38.63% on the default figures, the same number this tool prints.
What happens to Private Equity Return if buy price / invested changes by 10 %?
On these inputs a ±10 % change in buy price / invested takes Private Equity Return to 26.03% against the 38.63% example — around 39.9 % of the headline. The same test on every other field is in the sensitivity section.
Is the Private Equity Return result of 38.63% good or bad?
Neither, on its own — the label “Modest gain — check it after inflation and costs” is the band this figure falls in for the example inputs, and your own inputs will place you elsewhere on the same ladder. Judge the number against your history and your alternatives, and remember that a ten-percent error in Buy price / invested alone moves it by ≈39.9 %.
Is Private Equity Return accurate?
The arithmetic is exact: Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1 is evaluated with full floating-point precision and every substitution is printed in the worked example. What limits accuracy is input quality and the model’s assumptions, so treat the 38.63% result as the correct answer to the question you typed — and check the assumptions section before acting on it.
How do I calculate Private Equity Return manually?
Write down the inputs, then follow the printed steps in order — Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. A spreadsheet replicates it with two or three cells. The manual route is worth doing once to build intuition; after that the calculator saves time and eliminates transcription slips.
Why does CAGR differ from average yearly return?
CAGR compounds — it is the single steady rate that turns the start into the end, while arithmetic averages flatter volatile paths.
Are taxes included?
No, this is the pre-tax picture; subtract tax drag on gains and income before comparing with a tax-sheltered alternative.
Is my data private on this page?
Yes — computation happens locally in your browser, with no account, no tracking of your inputs and nothing sent to a server. The printed formula is the whole story of what happens to your figures.
What the labels on this page mean
- Annualised (CAGR)
- 3.70% in the default Private Equity Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Net profit
- $8,885.00 in the default Private Equity Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Value multiple
- 1.39 × in the default Private Equity Return calculation — one of the secondary figures an experienced reader checks before trusting the primary number.
- Total return
- The primary output of this tool: 38.63% for the default inputs, computed exactly from Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1.
- Worked example
- The calculation written out in full so that nothing on this page has to be taken on trust.
- Verdict band
- The interpretation attached to a result (“Modest gain — check it after inflation and costs” on these inputs), which turns a bare number into a position on a scale.
- Sensitivity (±10 %)
- How far the Private Equity Return moves when a single input is nudged ten percent either way; the ranked list on this page is computed live from this engine.
Method, sources and what this tool cannot tell you
There is no black box on this page — the engine evaluates Total return = (sell + income − buy) ÷ buy; CAGR = ((sell + income) ÷ buy)^(1/years) − 1. Source of record: Time-weighted return arithmetic per CFA Institute conventions. Specialist software layers extra coefficients on top of the same algebra; none are hidden here, and that transparency is what makes a disagreement traceable to a specific input instead of a black box.
Treat the output as a precise answer to the question you typed: exact arithmetic, transparent formula, published source, no hidden rounding. Nothing is smoothed, weighted or adjusted behind the scenes; where judgement enters, this page says so and names the input responsible.
Turning this Private Equity Return into a decision
Run the pessimistic case before the optimistic one; an opportunity that survives the pessimistic inputs is the only kind worth pursuing.
Whoever you are (investors and founders comparing opportunities on equal terms), the next step is the same: replace the example inputs with your own, note the date, and re-run whenever a figure moves. In Investing & Markets, a dated figure is a trend, and an undated one is a rumour.