For most of its history, private equity was built for institutions – pension funds, endowments, sovereign wealth funds. Individual investors were limited to the ultra-wealthy who could write large checks, tie up capital for a decade, and navigate the nuances of limited partnership structures. In recent years, technologies have developed allowing retail investors to gain…
Private equity firms spend considerable time finding the right business, market, or operating model before making an investment. This is fundamental, not opportunistic. Firms develop a long-term view on which industries or types of companies provide the best growth prospects, and they are selective about where they deploy capital. It should not be surprising, then, that once…
Diversification is an important topic and a strong consideration for any portfolio. It can come in many forms. In public markets, geographic diversification is often treated as a default best practice. However, in private equity, there is a compelling case for concentrating exposure exclusively in the United States rather than spreading capital across international markets….
Private equity is often portrayed as a blunt and ruthless strategy – an industry dominated by corporate raiders that slash costs, strip assets, and leave behind a trail of wreckage. This narrative poorly relates how private equity operates and what ultimately drives success in the asset class. Most private equity firms aim not to impair…
When private equity makes the news, its typically large buyout firms. They buy mega companies, so unsurprisingly make for better headline material. But bigger funds are just the tip of the iceberg. Below the surface is a scaled and matured middle market. Purchasing dynamics favor the middle market (MM). Large US buyout funds (defined as…
Modern portfolios are largely shaped around public markets, which are influenced by public sentiment as much as underlying fundamentals. However, most US businesses are privately held and accessible only through private equity. The merits of PE as an asset class are manifold, including benefits beyond returns. This week we discover why private equity is an…
There are many faces of a leveraged buyout dollar. The private equity industry offers a robust landscape of strategies that provide a wide spectrum of risk-return profiles appealing to different investor requirements. Whether equity or credit-oriented, there are many options for investors to construct portfolios to meet their specific risk-and-return goals. As we covered in…
The notion of private equity as anything but constructive for shareholder value is of recent vintage. The real story of PE is the story of commerce itself. The first enterprising person to buy a company instead of starting one engaged in a private equity transaction. Before World War II, most “private equity” transactions were funded…
Private equity as an asset class delivers strong returns to investors, often better than public market benchmarks (see Chart of the Week). It also diversifies investor portfolios with access to smaller high-growth private companies. As PE becomes available to high-net-worth investors, understanding how these investments work is essential for a sophisticated wealth program. While the…
Deal-making is poised to rebound, thanks to lower interest rates, a strong economy, and an overall favorable macro environment. So why does the media persist in predicting a gloomy outlook for private equity? There are certainly less optimistic data about the industry. Fundraising, for example, has slowed. According to PitchBook, PE firms raised $320 billion…