hard · Private Equity pe-core

What is the primary difference between the Kaplan-Schoar PME (KS-PME) and a direct alpha comparison?

1. Direct alpha applies only to fully realized deals, while KS-PME also folds in unrealized NAV.
2. KS-PME benchmarks against the average public market return, while direct alpha benchmarks against the risk-free rate.
3. KS-PME is a ratio of wealth multiples, while direct alpha is a spread in basis points of IRR.
4. Direct alpha disregards cash flow timing entirely, whereas KS-PME is a fully time-weighted return measure.

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