Private Equity Market Outlook: Could the Good Times Be Ending?
It’s time for managers and investors to know their options
What’s not to love about private equity?
In the low-interest era, the sector has become a juggernaut, doubling assets under management in the last 10 years and piling up $1 trillion in capital ready to be deployed, according to industry tracker Preqin. And it’s easy to see why the capital is piling in: PE funds have distributed over $400 billion back to investors every year since 2014.
But it might be time to start worrying.
We saw a similar increase in fundraising before: in 2007, a year before the financial crisis. Over the next years, investors watched helplessly as returns dwindled and funds staggered under the weight of assets they couldn’t sell, leaving some holding the bag.
And while there is no reason to believe we are headed toward an economic calamity of the same scope or severity as the Great Recession, a mild recession or even a simple correction could create significant problems for the private equity industry.