THE STATUS QUO IS BROKEN

The traditional private equity model—management fee, carried interest, long lockup—does not fit the current alternative investment environment:

  • “Two and Twenty” incentivizes managers to drive AUM growth and race to deploy capital.
  • Returns and exits largely depend on market-based multiple expansion, not brick-and-mortar enterprise growth.
  • Intensified competition “bids up” pricing, erodes risk premiums and leads to weak deal structures.
  • Co-investment allocations awarded based on blind-pool commitments do not nearly reflect demand.
 
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