private equity

“We actually kind of thought that we should be getting, I'll just use, you know, privates as an example, we should be getting kind of four to 500 basis points above the public market equivalent, whatever that is... And we were pleasantly surprised to see that n…”

“We really love private equity as an asset class here. It's a wonderful asset for families. Also, it's a wonderful asset, not just from an investment perspective, but from an estate planning perspective, it has some wonderful benefits.”

“I found there's just a higher level of transparency often on the private side, where managers can really, really dive in and tell you exactly how they were adding value at companies. You can talk to the CEOs of the companies often because they're small busines…”

“Right now multiples have been increasing across really every private, just about every private strategy. And they're increasing because there's so much dry powder out there and people are just, you know, putting it to work and paying more and more and more.”

“Our Private equity, which is a mix of buyout, growth equity, and venture capital, has come down from, over the last, say, six years, from low twenties down to 16%.”

“When you commit today, if I were committing to a private, you know, buyout manager today, They may not deploy the capital for four years.”

“On the specific point about fees, we believe it's important to optimize fees, not minimize fees. And we want to make sure that the firms actually have, you know, revenues to the principles that are enough to make them silly rich without having to find some oth…”

“In hedge funds, with all due respect, it feels like we're just fighting over how big our slice of a pie is gonna be, whereas in private equity and venture especially, it feels like we're growing the pie.”

“Bridgewater has about eight factors that drive their return. And you know what they are, their country, their currency, their momentum, duration, spread. And they can tell you, they have the sheet. And when we run our returns-based analysis, we get very close …”

“After the crisis, because you had a lot of schools that basically were illiquid because they had hedge funds that locked up on them, private equity distributions, and these schools didn't have the money to pay their distribution. So they were stuck. And now so…”

“You think about it, you go and say, okay, we're going to use the last 25 years of returns and correlations, and we're going to put that into a machine, and we're going to pretend that the next 10 years will look like the last 10 years. And then the second thin…”

“And, you know, a GP loves the idea of hearing about that, especially if they didn't come from the asset management business, which can be an advantage. Right? They know their sector. You know, they know the people.”

“So we, we're seeing more of that in different sectors, whether it's consumer goods, healthcare, energy, you know, definitely seeing more opportunities for To partner with people in those ways. And that, that wasn't the case before. They'd show up with a pitch …”

“Hedge funds are a fee structure or a legal entity so that I don't care if it's a hedged equity, directionally long hedge fund or private equity, it's equity.”

“When it comes to public equity, well, that's really sort of similar dynamics and drivers as private equity, but different structures.”

“The historical data on co-investments is, they are pro-cyclical, And they don't turn out well.”

“Dave Swenson has said, and I agree with him, that the ultimate form of capitalism is private equity, and I really agree with that, because, you know, you have a long time horizon, you're not beholden to quarterly numbers, and you can do the right thing, and th…”

“Some people give up liquidity, and we all talk about an illiquidity premium in private equity and real It hasn't particularly shown itself recently, but you would think it would over time.”

“And we're not going to see if we have five percent return on stocks, we're not going to have 15% returns on private equity. But historically you've gotten a three or 400 basis point premium, and maybe we'll get that kind of premium again, and that's real money…”

“And by the end of the process, it took us north of two years to actually go from the idea of investing in private equity to actually engaging the manager. And then of course, it takes years to actually fund private equity. So, you know, as a result, we missed …”

“Well, before 2008, 2009 financial crisis, you would be hard pressed to find a Taft-Hartley plan invested in private equity invested in emerging markets. It just didn't exist. In fact, in some industries, you would not even see plans invested in developed inter…”

“I have one plan in particular that the board has decided it needs to try to Really maximize returns and shoot for an eight plus percent return profile. And that means that we have, you know, 20% invested in private equity and 15% in emerging markets.”

“Once we finally got to the point where we had gotten the education, the RFP process and the discussions that went on between the consultant, the union trustees and the employer trustees created an environment where one side wasn't trusting the other side. And …”

“From studies we've done, we've known that our private equity returns are the highest asset class return that we have. We know that over full market cycles, it's a good full six percentage points above public equity or above the total fund return.”

“Linda at the time didn't believe in hedge funds. The private equity portfolio was 10%. That was it.”

“Today we're up around, to give you some idea, an allocation of between five and 10% of the total fund is in infrastructure, and similarly even probably higher weighted a little bit in terms of real estate And in PE, I think it's around the same five, five to s…”

“And we think the odds of us if we invest in a top GP of there being capital impairment in a fund are just zero or, you know, very remote.”

“Entry price for private equity has been going up and up and up. The exit price can't keep going up a lot if some stock markets on the relatively high side ought to recognize that that's probably as good as we can anticipate. Jeepers. It's getting harder and ha…”

“The real competition today is not by the investment managers to get your investment money. It's by the people who've got money to get access to the best investment managers. And that's been true for the last decade in venture capital. It's now clearly true in …”

“Private equity generally, of which venture capital is like, you know, the tiny bit that's generally clustered into that ass glass, I think is going to see a huge pullback in at least new allocations, if not the pace of allocations.”

“Our portfolio has no large buyout at all, because we think that, well, that makes the capacity so much harder, by the way, but we think that large buyout is really just levered equities, typically. And if there's skill added on top, and there might be, then mo…”

“We don't try to re underwrite the deal. We've already underwritten this manager. We've already backed them and we trust them. So our due diligence process will be focused on, is it in their skill set? Firstly, secondly, Is there alignment with the manager? Are…”

“Some of our local peers here in superannuation who have to compete for members have decided to go down a road of setting a fee budget for the whole fund, and then reporting those fees as a competitive advantage in their marketing, and we think that risks cutti…”

“A graph of tenure yields going back 40 years. And the reason I keep it there is that it looks like a ski slope, right? It goes from 14% down to where it is today. And there's been some gyrations, but it's basically, I say this to all my contemporaries, like no…”

“The way we look at private equity is if we can do nothing for the wrong reasons and make all of our decisions for the right reasons, Then we can probably cut out the bottom fifth quarter, maybe third of the distribution. In which case, if we pick median now, a…”

“And the ones with persistent good performance and venture as well, they're incredibly powerful businesses. They're franchises. They have access to deals. They have all sorts of levers of power. They control their suppliers and they control their customers, rig…”

“Three billion dollars of capital is not the same as a three billion dollar private equity fund. And so as quickly as that goes up, even if performance isn't bad, it was primarily European fund-to-funds money, and that, that was a piggy bank very quickly”

“When I was in private equity, I was the associate in charge of handling sort of the mail would come in and you get. 15 companies to look at and you'd pick one and you'd go bid and there'd be 50 other bidders on that. And that just never struck me as an efficie…”

“And they, by the way, they can pay more because they're loading it up with a tremendous amount of non-recourse debt. They're going to slash and burn the team. They're going to treat people for a short period of time while they own it terribly, right? Well, of …”

“What makes ad ventures very unusual is that we do almost all of our diligence in-house. So this is very unusual in private equity. Most of it's outsourced, both legal and financial due diligence is outsourced. They're even going to bring in Consultants to do p…”

“One of our favorite questions to ask is what are investments we could make today that wouldn't show up for five or 10 years? Private equity just can't ask that question.”

“I think that search funds more closely resemble private equity. It seems like sort of combination of down market private equity with operating partner that's already built in is kind of how I think about search funds.”

“Well, let me tell you create as much of a problem as you solve by having a brand grow up around one person, and we are hired, especially in private equity and hedge funds, many times because the brand has grown up around one person, and they create a successio…”

“Some funds, particularly near us and then here on the East Coast, have decided to take the index method and invested with hundreds of partnerships. And what you find is you get the average return out of private equity, which is actually below public Equity.”

“Right now, we're about 54% global equity, and we are truly global, so about fifty-fifty U.S. And non-U.S. We've got probably 12% right now in fixed income, and that's mostly domestic, but we've got a little bit of universal global fixed income. 12% in real est…”

“Back when I started in private equity in the nineties, you could get 500 over the public markets. Then it narrowed to about 300. And now the debate today is at one 50 net of cost.”

“We commit about six billion a year into private equity.”

“Recognize that probably the 2015, 1617, 18, maybe even the 19 vintage year may not be great returns because the price multiple is so high.”

“It was clear to me that it was not the direction of travel in the Federal Reserve System at the time to give new banking charters to anyone. But if they were going to give them to anyone, it wasn't going to be somebody whose pedigree said, hedge fund, private …”

“First of all, empirically, the private equity industry has delivered a premium. We did these studies at BlackRock, and even when you controlled for Cap selection, industry focus, leverage adjustments, fees. It still delivered, you know, three to 400 basis poin…”

“Our expected return for private equity is about 400 basis points over the long-term expected return of the public markets. So 10 real.”

“Once you're opportunistic real estate, you're just private equity. And so if that's the case, then just call it what it is and let's let it compete For the best return.”

“Even how we construct our managers, where they're located, like we basically have zeroed out private equity in Europe.”

“One of the few markets that's still inefficient is the secondary market and privates, relative to how capital flows, et cetera.”

“Because when I came in, we were over allocated on privates, and we ended up selling our lowest performing, on a future expected value, our lowest performing privates.”

“So I think during a downturn, yes, they'll trade at a greater discount than they trade today, but actually think that because a lot of those buyers, their only job is to buy privates. They don't really care what's going on in the rest of the world. And so you …”

“Then your relationship with the seller, your skill in negotiation and deal structure, all of these things are critical and Again, can quant help inform some of that? Probably, but I don't think it's ever going to completely eat the whole thing.”

“Institutional investors are the market. You're charging yourself, right? Who is going to change that? Who is going to take action to finally put an end to two and 20? Well, where is the power? Without your allocation, they can't generate a fee. I'm just asking…”

“Boutique is better. Hungry is better. Having a business risk is better.”

“And in some asset classes, like private equity in general, or private markets, but private equity in particular, without a relationship, we won't do the investment. Relationships are 95% of the driving force. People underestimate how important relationships ar…”

“What we're saying is that we can do the same thing either with a different deal team, with different operating partners, with different consultant on a regular basis. And achieve the same result without all the cost friction of selling the company three or fou…”

“It's a very disruptive activity for a company to change the partnership, the capital structure.”

“The management fee was there to cover the operating costs of the management company, and as the fund grew 10, 20, 40 times, the fees charged were not reduced by the same factor, and that structure is really conducive for the manager to increase the size of the…”

“Many times our managers are not the highest bids in some of these more regional areas. It's because people trust them. They know what they're going to do with their business and how they're going to be as a partner.”

“So if you're a thirty-five-year-old VP at a firm, and the firm's been successful, you're not gonna get credit for passing on a deal. And you only get paid for the stuff that you do do.”

“When you think about others like private equity, it just feels like there's just more and more allocation to that, and that market which might have been much more inefficient for unlisted companies, you know, in the two to three to 400 Million dollar range a f…”

“The private equity allocation that I inherited, and this goes back to our spend and what we're solving for being a little bit different than your typical foundation or endowment, we were over allocated to private equity generally with money in the ground and f…”

“If that industry feels really frothy to me, and it feels like there's some bad practices that will come back to kind of haunt the industry, I also worry that it's maybe been oversold to retail.”

“And if you're a financial advisor and you're recommending private equity, first of all, it's the thing you can sell where you get paid the biggest fees usually. And nobody's gonna know if you're right or wrong. For 10 years.”

“Now the problem is that just like in other parts of money management, performance persistence is not that great. So a firm that was top quartile in its last fund could well end up being second, third, or fourth quartile in its next one, and then back to first …”

“The advantages of doing it internally are that, quite frankly, the fee drag of private equity is the biggest of any asset class, and I Sort of knew what it was when I was on the other side, but as a limited partner, I really knew what it was. It's enormous.”

“I do think the return premium Which, while it's smaller now, probably, certainly than it was, is still there. I think the way that private equity guys and ladies think about driving performance, not getting caught up in being a public company, being very comme…”

“And so much of private equity today of LBOs is single B or triple C type quality, that I would say 25 to 30% of LBOs would go bankrupt in a normal business cycle, normal recession with normal levels of delinquency.”

“You can't predict revenue growth, and it's really hard to control it. Wish we could, and if it were possible, there'd be a class at Harvard Business School, how to drive revenue growth, okay? It's just impossible and unpredictable, and maybe you get things rig…”

“Now I think private markets are much more expensive than public markets, and you can see this with the venture-backed stuff like WeWork. Private markets say it's worth seventy-five billion. Public markets say it's worthless. You can see it in the deal multiple…”

“Not only is it impossible to predict, it's just wildly volatile. You can have a company you thought was gonna grow 15% that declines, and that's very common. Doesn't matter if you're forecasting one year away, three years away, or five years away, it's all rea…”

“There's this extend and pretend zombie type behavior where the money that you put into private equity never blows up, but you never get it back, you know. And I think that's probably the most likely scenario”

“First, it said that private equity had made the majority of its money in deals done at less than seven times EBITDA.”

“The EBITDA multiples are record high, and there's a 4.4 trillion of uncalled capital out there. All of this is bad for private equity going forward, unless you can find firms that have really superior operational capabilities.”

“We are about 24 to 25% in the ground invested in net asset value and private equity, including venture, which puts us about in the middle of the larger endowments.”

“I think in today's world, there's really no such thing as proprietary sourcing.”

“Moving from banking to private equity is a big challenge, because in banking, you're really kind of focused on solving problems. Whatever problem is thrown your way in terms of trying to meet this financing need or trying to put these two companies together. A…”

“In a world where there is so much money going into private equity right now, I mean, obviously, inflows of capital lead to price discovery, which collapses these kind of informational edges that a lot of people have built, so I do think that there are a lot of…”

“In some ways, I think that one of the advantages of private equity for, I will speak specifically to buyouts, Is that investors can't pull their money out of these things. And as a consequence, they don't see the volatility. They have no chance to transact at …”

“This assumption that you get paid an illiquidity premium for anything that happens to be illiquid is I think dangerous. I think it is going to cause you not to be focused on the question of, all right, if I think this is about operational excellence, why do I …”

“This is the kind of thing that may make me look foolish. I think private equity is done. I think that it will always be an investment style like it has for over the course of my career. It was just LBO investing when I started, I guess now it's private equity,…”

“Everyone's over levered, and private equity guys, they're the worst in terms of this.”

“I think in terms of governance, in terms of transparency, in terms of reporting, that whole notion of alignment of interest, if it's not going to happen now, it's never going to happen. It matters more than ever.”

“Private equity can't Continue to claim to represent a superior governance model for investing where that greater degree of control and influence leads to outside returns. And in the same breath, Say that we're unable to affect change as it relates to diversity…”

“A lot of organizations came into this current period, either, either at or very close to their desired allocations within private equity. And I think that makes the situation a little bit different than what we saw with the global financial crisis.”

“So about private equity sort of varies anywhere between 20 to 25%. And so the rest tends to be our risk appetite. It's probably more reflected in the public equity exposure of that. So our public equity today is around 50, I think 52, 53%.”

“Our expectation is that calls and distribution will both be lower. I think when we analyzed it, calls and distributions were down by a third to half through the global financial crisis, and that's sort of our base case right now that we can expect At least a t…”

“And the one thing I can guarantee you is, is that people who raise money will never give it back. They're just not going to give it back and say, I couldn't find anything. So they're going to find something to invest in. I think that's going to come to helping…”

“We don't sit on boards. Typically we don't change out management. On a very rare occasion, we've had to step in and be involved, but not very often. It's not what we're set up to do. We're not a loan to own type of investor.”

“Private equity average hold is much shorter, so the incentives are different, and investing in sustainability is often synonymous with a long-term orientation. Some of these things of investing in good processes and investing in your people pay off over multip…”

“If you want to put a billion dollars of equity into something, it's very hard to start at 10. And so we're willing to start at 10 or write a hundred million dollar check and then go from there while they need to start with two or three hundred million dollars …”

“All of us look at this now that I'm in this seat is yeah, let them go work at like one of these bolts bracket firms. Let them train these people for us. And then we'll take them, right? Like, we don't want to train any of these people. Like, that's a waste of …”

“So the combination of all those factors is driving to greater allocations to privates I think given some of the high valuations pre-coronavirus, particularly private real estate debt and private debt, rather than necessarily private equity, where there was per…”

“That said, probably the biggest bang for the buck is in alternatives. It's probably in illiquid asset classes. It's in people who think differently about venture or private equity and Even probably real estate on some level.”

“Private equity for sure. You can't separate the alpha from the beta. That's just one package.”

“There's a good chance that legislators started looking into this, and I think that that's going to cause a shift in allocation to much more smaller players into private space, more VC investments, and other more exotic strategies that don't rely on kind of rol…”

“The major driver of portfolio risk is growth and equity growth. But that exists in equities, and that exists in high yield, potentially, real estate, certainly private equity, and maybe even other investments. And so having a very clear picture of where that e…”

“I would argue that no private equity firm would buy a business because it's low price book or low price sales. They're looking at cash flows and how much they're going to grow and how secure those cash flows are, how certain they are of those cash flows. That'…”

“Going forward, what's tough is that you think of a 60 40 portfolio 40 of the sixties earning zero. Okay. Zero real, or maybe even negative real. And if your PE is 20, that's an earnings yield of five. Now an earnings yield of five, if bond yields are zero, is …”

“We did a ton of research on liquid alternatives, hedge funds, all the different asset classes. We kept coming back to private equity as an area that we felt was enduring, that could improve our client outcomes”

“We all know the Nkubo databases and looking at the largest endowments and foundations versus the mids and the smalls, private equity and hedge funds in general have not worked out really well For those below the top 10% AUM mandates.”

“If you read the press release that we put out, we're starting in the OCIO. We're starting in the QP on the high net worth side, but our long run aspiration is to democratize this asset class.”

“Let's think about a target retirement fund, 50 year horizon, multi-asset class, single nav, rebalanced with return premiums that could be somewhere two to 400 basis points over public markets. I would argue that those investors are the investors who need priva…”

“When you start thinking about these hybrid asset classes that have a little equity beta, a little bond beta, it can really cause some challenges to your asset allocation process. Like, where would private credit or high yield sit? Do you break it and say it's …”

“We feel confident that this private equity offer will outperform public equity, whether it's two, three, four, 500 basis points.”

“Very much like they would price a sovereign wealth fund, and so we're able to take our thirty million clients at Vanguard and six trillion dollars, and without saying a word, the price comes in at a very reasonable level that we are now getting terms and condi…”

“You can clearly see the dispersion of returns in private equity are significant. And a lot of the top GPs are oversubscribed and full and not taking on new clients.”

“We were very attractive to the top private equity because our cash flow will be contrarian and counter cyclical to their traditional cash flow model. So we are actually a stabilizing force for those private equity managers.”

“I mean, we saw the same thing with our private equity portfolio where our target's nine percent, and it was well above that when buyouts were doing well, and now it's venture's turn.”

“AT&T was one of the first corporate pension funds to invest in venture capital and private equity.”

“Really is the secret to private equity is to be able to invest as much money as you can in your own deals.”

“And it was funny because no one thought being a specialist private equity investor was a good idea. And we were kind of the first to really be specialized. And I guess the one thing I guess we proved is having some kind of angle and investing really pays off.”

“Where a hedge fund is operating from the outside in, we're operating from the inside, and it's just a much better way to invest. I've always been a big believer that private equity is just a much, much better business than the hedge fund business.”

“So I do think private equity will have a dampening of returns, meaningfully dampening, but when the 10 years trading at. Maybe if returns are only single digit for private equity, that's still good enough. I just think returns have to come down.”

“You're seeing the same thing in private equity. Everything used to be a valuation based on EBITDA. We're slowly getting to valuations based on revenue. And the only reason why you do it based on revenue is because you can't do it based on EBITDA because there …”

“Private equity gets a bad rap because of the outsized egos. And the truth is, Some of it's well-deserved”

“And I think SPACs aren't going away. And so I think there's even more competition. So I just think there's just one overarching fact here is returns have to go down. They just have to.”

“And I think over the next 20 years you're gonna see That change in private equity where You're going to own your winners longer, and you're going to find ways to pay out, in essence, carry halfway through the point, because people still want to get paid.”

“More firms and private equity alternatives, hedge funds, asset management are getting into what I would call sophisticated marketing and reputation management. And that's been accelerated by COVID too”

“Especially in areas like private equity, they doubled down on digital, they doubled down on video, they doubled down on audio, and they realized they really couldn't get the job done without a lot of these call it marketing things.”

“All the real money in dollars is in old school leveraged buyouts and private equity, and I just haven't done that much.”

“So many of the hedge fund professionals that I know when they retire, no longer manage their money in a hedge fund format. They want to invest in private markets and mostly private equity.”

“If you look at all of the academic research and it doesn't matter if it's a private equity or venture capital, the greatest determinant of your returns With the highest R square is your entry valuation. Some people call that vintage, but it is your entry valua…”

“The reason why you buy private equity isn't for the total return, in my view, it's the relative return to your PME, because a private equity portfolio or private equity management, let me just give you an example. Let's say they generate a 12% IR. Well, if you…”

“And so private equity in general is going to have something around 10% tracking error to MSCI world over time.”

“I think private equity is where hedge funds were like a decade ago or so, right? It's a very more networking type industry. You kind of sign up. I think private equity and the private asset classes are going to institutionalize and mature going forward. I thin…”

“So while 75% of the capital is deployed through funds, the other 25% takes probably more like two-thirds of our time, and that's a range of activities that include co-investments, structured investments of different kinds in funds.”

“Well, we have, I don't know how private equity today's 16 with a plan to grow to 19 over the next three years is the fastest growing component of this.”

“Analytically, I think starting with a market opportunity and then trying to identify the best team to pursue, to execute on that market opportunity, that seems to have led to the best outcomes for me.”

“Understanding the context, understanding fully the incentives of the different players, that turns out to be more determinative than I would have guessed. If you go back and look at these deals, turns out some of those factors matter a lot more than the factor…”

“The way I think about it and the advice I give others who are beginning that journey is you want to focus on the deal making. Focus on the type of deals that you think you and your firm are suited to do. That will attract the types of investors that are lookin…”

“I always say we plan to exit these investments for ourselves and our investors. And if we don't foster independence, then we'll own them forever.”

“And so we're going to have lots of talented people going into private equity. And over time, they will arbitrage the difference risk adjusted and liquidity adjusted pretty well between publicly listed securities and private equity.”

“In the club deals, you have the advantage point of, well, whoo, Who's actually doing the work? Who's actually just a financial investor? And who does management call when they have issues? Who does management defer to in the board meetings? And so that is inva…”

“If you think back to the 1997, it was really just, it was a very relationship heavy You largely had the data that was given to you by the manager.”

“A place like Japan, where the private equity as a percentage GDP is probably the lowest of any developed market in the world, as you see some of the daily headlines, that is changing, that is evolving, and so that's a quite attractive market today.”

“So for the beginning of the industry until the last 10 years, if you really wanted to invest in private equity, your choices were generally a ten-year limited partnership. You would make an investment up front, and then the manager would invest and create liqu…”

“And the fact that for the last 20 years, there's been secondary buyouts in this industry. That didn't exist before 2002, 2003.”

“And if anything, it's the only place over the last decade where That has contributed the excess return when they're trying to meet their eight percent or seven and a half or seven percent total asset return. They're not getting returns in a lot of places, and …”

“Tell me why it can't be 20% relative to the size of the Publix, or 30%. Because I think what has happened in the last couple of decades is almost a complete development, and you're seeing this on the credit side, of a completely independent private capital mar…”

“It is shrouded in what I described as this is a great risk-reward opportunity, because you, of course, have to evaluate the risk as well. But when I hear that, I actually believe that's a euphemism for this is a below the bar return.”

“I think it would be a misconception to think that a market outside of the U.S. Is just X years behind the U.S. Or Y years. I mean, these are developing in their own ways. They're developing in a much faster pace than the U.S. Private equity markets have.”

“There's this natural tendency to believe or feel like that scale is correlated with lower returns, and it is, by the way, but it doesn't mean it's causal, which is to say, if you can find the selective opportunities at scale where you can generate high perform…”

“We've earned over a thousand basis points higher than The private equity mean during our history”

“One of the dirty little secrets of private equity is we're already adversely biased against beautiful companies. And if you buy one, you probably overpaid.”

“The construct of our industry is one of invest over five years, return over that next five, and so that's kind of, it was built 30 years ago. I don't think that model really applies specifically to enterprise software.”

“When we do our analysis, there's only probably 10% of the private equity firms out there in that space that have done half a dozen deals. We've done over 500 or so.”

“And I realized that none of them, like any in that period of time, none of them are really thinking about software as an area of investment. Some may have had one or two software investments, but they were thinking about technology broadly, and at that time, t…”

“The best performance of any private equity fund in any given vintage year will almost certainly be three guys or three women in a garage in Palo Alto who come up with a new venture fund, and all of a sudden they make 25 times their money.”

“I do think that fundraising is something that doesn't have the social status that maybe dealmakers have accorded themselves. In other words, if you look at the totem pole of people in the private equity world or in the investment world, people generally don't …”

“Of course, I could see clearly that there wasn't that many women staying there. It's not that they were not hiring women as analysts or associates, but it's such a hard work, and I don't know, for some reason, we were losing a lot of women along the way, and t…”

“It doesn't matter where you started with a hundred books out there or just 10, always end up with two serious bidders, and that's where you have to make your difference.”

“Ballpark companies which are under ownership of a private equity owner accounts in the US, in the UK, in France for about six to nine percent of GDP.”

“When you have to show exits, you sell your best assets first.”

“Because remember, 2004, five, six, seven, like a craziness of private equity, and it was less about client relationships as bankers, and more about securing a mandate with, you know, whoever was trying to buy whatever asset.”

“In investing, and in particular, maybe in private equity, but I think beyond private equity, some of these transitions should be fairly long-term, and the reason being is that something like the Wallace Foundation, you entrust your capital to us for a decade, …”

“And I think PE is going to be a good asset class. It's going to be a great asset class going forward, but we have to realize returns are coming down, and they're coming down meaningfully. They have to. Purchase price multiples are exploding, and so the higher …”

“The fact that valuations have been high, some claim too high, Actually, it's a barrier to entry. It keeps big players that could be new players or new entrants out of this market. There should be 20 or 30 private equity firms doing large buyouts and software. …”

“We think that too many hedge funds who did credit thought that all of a sudden they were in private equity and they can improve businesses. We don't think that that's our skill set. Frankly, we think if we think we can improve it probably means that other peop…”

“We wanted to have this elongated, bass-ackwards investing where you do your homework ahead of time and you really know what you want to do, and then when the opportunity comes, you can move instantly, but when you see an opportunity that you haven't done the m…”

“And I think the other leagues that have not yet allowed it will change pretty quickly once you see what happens with some of these firms that do sell a stake.”

“If I own something and an activist comes in, and the activist thinks he knows better the management, that irritates me. I mean, I've seen so many Whether they're private equity guys or guys that literally destroy companies because they really don't know what t…”

“One of the things that I strongly advise Is to have the, from the top of the house involved in the executive coaching program. So if we're sort of sticking with the private equity world, the managing partners, and when the managing partner or the co-founders, …”

“The large, huge funds that are raising that are, we call them the coupon clippers that are raising, sure, I'm going to offend some people, but too much money, and it's misaligned”

“One of the other things we love about private equity is if you can create food for that ecosystem, it's a risk, wash, repeat process of I buy something small and I sell it to the big guys.”

“We need to supplement the trading and debt skills because that is a business of many decisions with imperfect information rather than few decisions with, in a perfect world, perfect information. I believe that those teams need to be different and need to be se…”

“The private equity business model and private credit and private real estate fit in the same bucket. But you have locked up capital. That's going to pay a contractually obligated management fee, regardless of what transpires with that business, which provides …”

“They have a six or seven percent actuarial assumption that they've got to meet, and there's zero chance that their public equity or fixed income buckets are going to meet that need, so they're having to do more privates.”

“He said, if I go to my board and say, these are the 20 managers we're going to hire this quarter, and next quarter we're going to hire 20 different ones, at fifty million bucks a piece, I'm going to get fired. Because of the fact that they're not going to want…”

“And as there became more and more adoption of those assets and asset classes, You know, what you would expect happened. Returns came down, whether you were trying to do individual deals or make investments in those spaces, or whether you were investing in mana…”

“Most of who we have incumbent managers are heavy tech, if not all tech. Everybody's doing tech these days. Everybody has a tech group, but most of these groups that we have and that I inherited are solely tech, so we've been Looking for decidedly non-tech.”

“You can pretty consistently make good returns, but I would say that these are lower returns than you got in the previous 10 years with private equity, but they're going to be a lot better than the returns in the public equity market.”

“Venture strategies, private equity, real estate, they're all equity strategies, and so if you look at your portfolio, you're going to be long S&P, basically. So macro provides a diversifier, and if it's not working, great, the rest of your portfolio is working…”

“The reality was alpha was being generated on the ground. Interacting with people, building relationships where they wanted to sell to you at a lower price rather than someone else at a higher price because they liked you.”

“What I find is when you're in the heat of battle, it's very hard to like zoom out and say like, why are we fighting this war? Right? Zoom out because you're just in it. And that career path, private equity, hedge funds, you're in the heat of battle constantly.…”

“From an investing standpoint, I would say one of the biggest realizations I had was that it is very, very difficult to fight a bad market. And what I mean by that is you can invest in the best business in a shitty declining market. And really have a tough time…”

“You shouldn't have all your positions from your funds as two and a half million dollar positions and a bunch of your co-investment positions as five, seven halves and tens.”

“Well, if you have everybody unanimous, then no one wants to be negative during the process. And nobody wants to say, I don't like it, okay, I'm good. So let somebody say they don't like it and say no. And I really thought that was genius.”

“Some people believe that co-investment in its own right is negatively selected. I don't, patently don't believe that because almost every single deal we do is because somebody needs more money. Never because like, oh, our normal equity check is a hundred, but …”

“Unless you are a super growth, super techie company, you can't get public these days. And that's part of the boom of the private equity industry. Like the companies I took public as a 28 year old could not go public today. They can only be owned by private equ…”

“I think we've decided that very commodity oriented cyclical businesses don't work in a private equity setting very well. It doesn't help that everybody also just hates oil and gas and you're better off in more nimble vehicles where you can get in at the right …”

“And I include private equity and venture as part of just variations of the market.”

“A hedge fund is not an aspirational investment for the LP. It is definitely an aspirational investment for a GP. Similarly, private equity, it's definitely aspirational for the people who own the firm. That's a mathematically correct statement.”

“This is an industry that is really disliked. It's extraordinary how, how disliked we are, and we do it to ourselves. We do it to ourselves with the amount of money that sloshes around and the way generally as an industry we act like, well, we deserve it becaus…”

“On the investing side, again, one of the big changes in the industry over the years is everyone always used to do one thing, like you did private equity or you did private credit. Now you do everything and we do everything.”

“I worry a little bit about the idea that the mom and pop investor, the people who really do not know how private equity works, are all of a sudden going to come into private equity. Man, that just seems like a bridge too far today.”

“The other myth is we have proprietary deal flow. No, you don't. You might have a proprietary deal. You do not have proprietary deal flow because the reality is everybody knows private equity is around, and so there's no way to get a deal without someone going,…”

“The market used to be dominated by funds of funds, and that was not at all customized. You just all were the same. You went in a fund of funds, and that's what you got. That's not where the world is today.”

“To a private equity person, we're the only industry that does not believe technology and data will change the way we operate. And yet we tell every other industry that we buy or control that, oh my god, technology and data are going to change your industry.”

“And so I think from a pricing perspective, we spend so much time on pricing and obsess on it as the only thing that matters, and it just is not. It's important, especially at the extreme. So late last year, especially in some of the high growth areas, you kind…”

“That is when, to me, private equity, private markets established themselves. It was the greatest thing that happened to the industry. And I know people will go, that asshole, what's he saying that for such a horrible time. But it's because at that point, every…”

“These are the greatest effing salespeople on earth. They just are. They really are. They're so good. I say that to people all the time. We are dealing with some of the smartest, best, That salespeople will ever meet.”

“Maybe some of the larger ones will. They're public, and maybe they won't have as much issue with it, and you can get it through FOIA, kind of those things that people do, but the venture firms, some of the smaller ones, no way.”

“The illiquid part of portfolios is now an established part of how you invest. If you're not in it in some way, you're not really having a balanced portfolio that's going to perform.”

“I think in 10 years you and I will have this conversation and we will be talking about portfolio construction and whether we're leaning more into growth, more into this, more into that, whatever.”

“When you look at KKR, there's two people. When you look at Carlyle, there's three people. When you look at some of the great firms, That have done really well in our industry. It is not one person and it's not 15 people. So I think you have to have this group …”

“Well, we're fortunate in the sense that we have a huge database just because when you have a trillion basically in assets that you're running on real time and doing cash flows, you have a lot of that data, but to have it all, like if I said, let's go get all o…”

“30% of deals in private equity, and this is over time, have gone from one general partner to another.”

“I believe in 10 years, 15 years, that portfolios will, by and large, be 50% private, 50% public.”

“And I think when you discover it, probably it's in downturns, unfortunately, when you see what really goes on.”

“I am not Of the view that more money necessarily means lower returns.”

“We're happy to pay two in 20 for the first two, not so much for use of leverage, but it's interesting because some GPs think about the world that way, but many just say, well, it's all alpha.”

“Private equity puts a timeframe on the investment and the founder and puts a real noose above their neck if it's not seen as a real partnership.”

“Things like venture capital and private equity and real estate investing all require a lot of resources to either find the deals or to find the managers who are conducting those deals globally. Those investment areas, the winners tend to be very plugged in and…”

“Whenever you say this is it, it's kind of got to be it.”

“I think private equity is making a mistake by aggregating all the economics in such a sliver of the company. We would all be better off as investors put aside the good to society by more evenly distributing it because the senior people are going to quickly tap…”

“The re-up process was relatively straightforward. That is unequivocally not the case anymore. We would be investing two times more than we have just in re-ups if that was the case. There are a lot of good, not great managers that would have their big LPs write…”

“With institutions that hire law firms like Kirkland and Ellis and large financial advisors, does a large sovereign wealth fund need ultra protection to negotiate against a private equity institution? They know what they're doing, and they can hire people to un…”

“Private equity is about two-thirds of our business today. The rest is high-end litigation. That's about a quarter of our business. Restructuring is the remaining, although restructuring bounces between more or less than more, depending on the cycle that we're …”

“Some of the great law firms in the space stuck to a more traditional model, and what I mean by that is you recruit people from law school, you train them up, and they decide to stay, and their skill sets fit, and they, 1015 years later, are partnered. But we s…”

“Ensuring that our younger superstars are compensated properly, the way to do that is we don't have a lot of people in their sixties, let alone seventies, stay around our firm, particularly on the private equity side. Litigation can be a little different, but c…”

“In terms of the portfolio, so our 10 stock portfolio, the current ROE is 33%. Into the dividend yield, we're talking about eight, nine percent dividend yield... And in terms of, again, valuations, the PE of the portfolio is today at eight, nine times PE.”

“96% of CLOs had a positive return to the equity class from before the financial crisis with a median of 15 IRR, outperforming private equity, outperforming the S&P 500 even.”

“There are 50,000 dollar tickets. There are 20,000 dollar tickets. There are 10,000 dollar tickets coming out. And it's not fully available to retail, but it's coming.”

“There's nothing automated about it. There's nothing that a supercomputer can replicate. There's no ETF version of private equity or private markets more generally. It's a people business, and therefore you have to understand The traits and DNA of those people,…”

“They have an amazing network of data, executives, knowledge, know-how, and this gives them a fantastic edge even before you look at things like size and scale. They have great information, and they're able to capitalize on it. That's not something you can just…”

“As soon as you start to do deals which are like a billion dollars per deal or more, right? It's hard to say that no one else will ever look at that deal Other than you, between the time the idea comes up and you closing the deal. No one's ever going to look at…”

“And so this, I think, is a huge information advantage because not only does it help you scout for new opportunities, it also helps you, I think, defend your existing investments better if you know what's coming down the road.”

“And the best firms, they're almost better on defense than they are on offense.”

“If you do one strategy, if you're a one trick pony, even if you're amazing at it, you're going to limit yourself in scale until you start to do other things.”

“You can't just sell your duds. That never works in a secondary.”

“I'm a big believer that the people who we trust with our capital need to be pencils down and really working with the portfolio companies. We have had five to seven years of Massive amounts of capital going into buying private firms and taking companies private…”

“I really think there's benefits in terms of returns. To having a team that's empowered and not having it be this one person show. We can all name a lot of private equity firms where there's really just one name that's talked about. And I think that's a real fa…”

“Today, that probably means there's very little going on in the traditional buyout world, primarily because of the lack of financing that really puts it down on our fence, and people are not bringing businesses and traditional private equity options, because wh…”

“So we've been in private equity investing since the mid-nineteen nineties. It's roughly about 13 to 14% of our overall book, which is a sizable amount, but it's not nearly as big as some other investors have. I'm happy with that. It's roughly split equal betwe…”

“And frankly, we didn't see that underlying in company performance continue to be strong even in the second half of the year. And we saw, I'd say, low single digit declines even at year end. For the broad buyout market, probably plus or minus five percent.”

“So I think what you're seeing in the private markets is actually what's happening. It's not that the value's Are inflated, or there's a lag factor. They're legitimate valuations, and it's why, by the way, you're in private equity. It just, sorry, it performs b…”

“One of the curious things about at least this cycle right now is that there really isn't any predominant theme that says, oh, here's an incredible opportunity space like in tech. As John was describing, there are great characteristics behind these industries t…”

“I don't think being a newer manager in the next two or three years, unless you have some incredibly great area you're in, or have something unique, are going to do very well. It just seems like the more conservative, I'll call them, organizations are Probably …”

“I would argue it's a sign of a very healthy market and a growing market when you have more dry powder coming in, and that's what's happened in private equity, private credit, all those different illiquid markets.”

“It needs to learn how to now be socially acceptable, if you will. It's kind of like an awkward teenager that goes, oh, I didn't know how to behave that way. We'll get there.”

“Private equity outperforms because it's a better form of governance, period. I mean, I get the leverage and I get all that other crap, but it is a better form of governance. You'd much rather be private than public in terms of your ability to do things.”

“We will have elongated hold periods, which means IRRs are coming down. Now, presumably the public market returns are also coming down from what they were the last five, 10 years. But I think people need to recognize that. I know general partners in particular …”

“In terms of the financing markets on the regular private equity world, if rates stay where they are, and in my world, obviously, they're not going to go up that much, this isn't catastrophic.”

“That will continue to be a growing part of the market. It will have hiccups. We saw the ones at the end of last year on some of the name products, and so I think people need to be careful in terms of how they're selling into that market, the investor base that…”

“When you look at the amount of dry powder and secondaries relative to the annual deal flow and you compare it to literally every other part of private equity, it's pretty extraordinary how undercapitalized it is despite all the large size funds that are being …”

“I think from an investable universe, half of the private equity in Asia had really ultimately been within China, and a lot of that was actually USD offshore. What's been interesting to watch is the size of the China private equity and venture market from a fun…”

“I think this industry could be two, three times the size than it is today, and still be healthy and functioning and lots of flows of capital.”

“What's happening now is the deal activity has slowed. There's no question, especially compared to what it was in the heyday of 21, 20. What you're seeing in this market today is on the equity side, The deals being done are really good companies. Great companie…”

“We've seen already an uptick in the deal flow on the co-investment side. So although overall private equity deals are down, managers, because they're either overcapitalizing from the equity standpoint, or they're reserving more than they once did, or they now …”

“We have had more equity in companies than we've had in prior cycles. So if we think about the risk to the credit compared to what it was in The risk going forward of deals that have been done is more on the equity, I believe, than on the credit. The credit is …”

“I'm not a big believer in the amount of diversification that most of this industry says you got to have. You have to cut back the number of relationships you have and concentrate them on those groups that right or wrong you believe are going to get you through…”

“So for me, like the biggest sea change has been the rubbernecking, which has kind of gummed up the investable opportunities or the capital that would otherwise flow to what I think of as a pretty expansive universe of opportunities.”

“I think you'll see an elongation of the holding period. So when you look back and you saw what happened, again, it's not the same as the global financial crisis, but there's some lessons learned there. I think when managers are sitting on investments that are …”

“First of all, there's a lot less leverage on the strategy than there would be in private equity. In a lot of cases, there's no leverage. In some cases, there's limited leverage. Real estate, if you're doing more distressed or opportunistic real estate, that li…”

“Not all private equity, but a lot of private equity is buying In favor businesses at higher multiples because you think you can operate it better, or you think EBITDA is going to continue to grow, or sometimes it's just a financing arbitrage as to how you do t…”

“So people see a fund or two where not only do you have good TVPI, but you've got good DPI, and all of a sudden people are subscribing to your strategy. So it's really a strategy that moves over decades versus moving over years.”

“Today, you can make loans at 12 to 15%, because nobody else is making them, and you're senior and you're secured, but I don't think private equity over the next three years is gonna make you 15, 20%, and if it does, that's great,”

“Obviously, there's an adjustment as the cost of capital goes up, leverage strategies get hurt, and then there has to either be more equity in deals and prices have to come down.”

“We were underweight private equity. So we are using this moment to think about where is the best place to add.”

“In lots of parts of the market, the data is easy to manipulate. Depending on how liquid, even not just private equity, but how do you mark a credit book is very important. Some people market mid-market, some people mark bid and ask. I think it's useful to star…”

“So I like to have a set analytics that you're going to do for every single manager could be different between private equity and public or whatever, but it's always the same. So that you don't end up just cherry picking data or cherry picking references.”

“They were very early in the 19 nineties into private equity. They were also early into the aughts in emerging markets. And when I was there right after 2010, they were looking to pivot into the frontier markets.”

“People want to compare private equity performance to public equity performance, and some people out there who I don't think understand the math actually use sharp ratios to compare them. That's just crazy to me. I'm like, for crying out loud, if I could value …”

“I just feel like a lot of things are mismarked, which probably gets back to while I have a tremendous affinity for the private equity model, I think they have some issues and challenges associated with the assets they've deployed over the last two years.”

“In private equity, it's about two percent penetrated, and that's doubled in the last decade from one percent to two percent.”

“On the flip side, if you go to the buyout world, it's this evolution of man, the lower middle market folks. Get companies, and they sell to the middle market folks, sell to the large cap folks, and you have that virtuous cycle. And actually, you have situation…”

“Had that rescue not happened when it did, you might see very, very different numbers out of private equity.”

“I think the remainder of this year and even into next year is going to be a lot of that. It's going to be a lot of just muddling through over levered assets and owners who aren't quite sure what to do about that.”

“I think what you see with the winners in this business, and I think there's going to be a thinning of the herd. I think there's going to be Slimming now that the conditions are tougher. I think you'll find that those who are not able to perform consistently wi…”

“And in some sense, they have, in my observation, sort of supplanted in importance the investment banks of a generation or two ago.”

“We're not seeing systemic problems with private equity. There are very few that go bust. And I think not just because of the corporate veil point, but I think also just the way their own risk management is set up. It's inherently very conservative.”

“So I think if we don't change that piercing the corporate veil issue, which it's not a question of capitalism or non-capitalism, it's really a question of in the weeds, how do we design our business system? I think we're going to have increasingly short-term t…”

“Durations match, broadly speaking, the requirements of the underlying investor. And the reason that you're seeing increasing diversification in those durations is not just because the industry is growing, and therefore it's growing in different ways, different…”

“That also is borne out at least in some of the sort of quantitative studies, suggesting, for instance, that private equity-owned portfolio companies are 10 times as likely to go bankrupt as non-private equity-owned peers.”

“We lawyers have this incredible ability to invent a flawed business model every 20 years. Right now, I would argue that it's in large part private equity. 20 years ago, it would have been subprime lenders. 40 years ago, it would have been SNLs. 60 years ago, i…”