Really? Up to 25% of Private Equity Firms to Disappear?
Apparently so. Private equity experts are just doing the math that calculates the capital available to the sector from institutional investors, the relatively poor performance of many private equity firms, and, as a result, the nearly certain inability that these underperformers will have to raise new funds. Bleak in a lot ways (e.g., less capital means less economic growth), but Darwinism is a truism. Nothing to argue about. It is what it is. Interesting to see where institutional capital is rerouted. To the small number of highly successful private equity firms that deliver expected returns? Very possibly, just as we have seen pension fund money previously allocated to Tier 2 and Tier 3 venture capital firms now being reallocated to a small number of Tier 1 VCs that seem to be the only ones that can earn the expected returns in that capital class. To the public markets? To foreign markets? To new alternative asset classes?