Use three Guide to Alternatives slides to support client conversations on the opportunities in private equity.
More companies are staying private for longer
Despite equity markets climbing higher, the number of companies going public has steadily declined. Whether it is the high costs associate with going public or the ability to raise money from the private markets, many companies are opting to stay private for longer. Companies that do go public are doing so at a more mature stage, experiencing healthy growth while they are private. Private markets offer access to a broader array of opportunities not found in the public market and the ability to invest in a company as — not after — it flourishes. In addition, private equity managers help young companies grow organically by making operational and strategic improvements.
Greater access to a diverse set of companies
As the cost and complexity of listing on public stock markets has risen, fast-growing companies are choosing to stay private for longer. With a limited opportunity set in public markets, investors can look to private markets for a wider and more diverse array of companies. Over 85% of U.S. companies that generate $100 million or more in revenue are privately held, representing a large opportunity set of profitable and growing businesses that can only be accessed through investing in private equity.
Private equity has outperformed public equity over the long term
Private equity has outperformed public equity over the long term and is expected to continue to do so. Over the last 20 years, global private equity has outperformed public equity by an annualized 4%, while having fewer negative years. While large-cap public equities have had exceptional performance since 2023, particularly driven by sectors such as technology, this is expected to normalize over the long run.