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Fundamentals of Private Equity
Large Investable Universe
Private Equity-Owned Companies Represent Over Two-Thirds of Companies1
Public markets do not cover the full investment universe. Private equity provides access and exposure to companies not available in public markets.
In 2000, 19% of U.S. companies were private | In 2024, 67% of U.S. companies are private
Portfolio Risk / Return Benefits
Private Equity can Improve a Portfolio's Risk / Return Profile2
An allocation to private equity can complement traditional portfolios and significantly improve the risk/return profile.
Portfolio Risk/Return Profile 25 Years Ended March 31, 2024
Value Creation on the Private Side Is Growing
Value Creation on the Private Side Is Growing3
Compared to 20+ years ago, companies are staying private longer. The implication is that much of a company’s growth is shifting to the private side; value creation is mostly earned by private owners, and less so for public shareholders.
Average IPO Market Cap ($mn)
Private Equity-Owned Companies Represent Over Two-Thirds of Companies1
Public markets do not cover the full investment universe. Private equity provides access and exposure to companies not available in public markets.
In 2000, 19% of U.S. companies were private | In 2024, 67% of U.S. companies are private
Private Equity can Improve a Portfolio's Risk / Return Profile2
An allocation to private equity can complement traditional portfolios and significantly improve the risk/return profile.
Portfolio Risk/Return Profile 25 Years Ended March 31, 2024
Value Creation on the Private Side Is Growing3
Compared to 20+ years ago, companies are staying private longer. The implication is that much of a company’s growth is shifting to the private side; value creation is mostly earned by private owners, and less so for public shareholders.
Average IPO Market Cap ($mn)
| Public Equity | Traditional Private Equity | Evergreen Private Equity | |
|---|---|---|---|
| PRICING | Daily market pricing | NAV published quarterly | NAV published monthly |
| INVESTMENT PACE | Invested immediately | Invested over time (i.e. ~3 – 4 years) | Invested immediately |
| REPORTING | Daily market pricing, regulated reporting | Quarterly reporting, not always regulated | Monthly reporting, regulated |
| LIQUIDITY | Daily liquidity | Illiquid. Generally 8+ year investment | Recurring opportunities for limited liquidity with periodic tender offers |
| VALUE CREATION | Generally passive | Active | Active |
| ABILITY TO CREATE VALUE | Low to none | High | High |
Buyouts Secondaries Roundtable: This is Not a Market Moment
- In a roundtable discussion conducted by Buyouts, Boriana Karastoyanova evaluates the continued demand for capital solutions in the secondaries market, as both GPs and LPs navigate a shifting market backdrop.
The Opportunities Across Private Equity’s Current Liquidity Landscape
- There are attractive opportunities for experienced liquidity providers in the current private equity market environment.
The Case for Co-investments
- Scarcity of co-investment capital could be creating a window of opportunity.