In the past 10 years, the average buyout fund has
consistently outperformed the S&P 500—by a significant
margin across multiple time periods and geographies. Not
surprisingly, money has followed success. In 2022, private equity
(PE) firms raised a record $938 billion; today, they have about
$2.5 trillion waiting to be deployed.
But that record of superior performance is in danger. The PE
industry has been greatly affected by global macroeconomic shifts,
including short-term disruptions like high inflation, rising
interest rates, supply chain issues, and geopolitical tensions.
Moreover, long-term changes such as technology advancements, and
climate issues have put downward pressure on returns for PE
investors. PE buyout multiples declined slightly in 2022, dropping
from a record 13.2 times EBITDA to 12.9 times. PE funds began to
post negative returns across the globe for the first time since
2008, for vintages between 2000 and 2019, ending its five-year run
as the
