This what Ted's thinking, private equity investing in 2030, takes a look at the playbook

for investing in private equity and how the current period of liquidity challenges might impact

allocations going forward. Allocators will need to fine-tune their core investment

beliefs to answer the many questions this environment has raised. Private Equity Investing in 2030.

Warren Buffett says, only when the tide goes out to you discover who's swimming naked. For nearly two decades,

private equity thrived on low rates and revenue growth. But since 2021, the tide has turned,

exposing flaws in the old allocator's playbook and demanding a new one.

The traditional private equity playbook.

Historically, the private equity playbook for allocators has been a straightforward bottom-up approach.

Allocators developed beliefs about strategies that would outperform, met lots of managers,

selected those that fit their beliefs, and invested in their funds.

These managers would buy companies, own them for several years, and sell.

As an investor's pool grew, they would re-up with managers by committing larger sums

to maintain a stable or growing allocation in their portfolio while ensuring a steady stream of

capital through distributions. The approach provided consistency, but relied heavily on predictable

market conditions. The Changing Environment

The Surgeon Commitments leading into 2021 exposed cracks in the old playbook.

Distributions from private equity have remained relatively stable, but the dollars invested are now three times larger than they were 10 years ago.

This shrinking distribution yield on a private equity portfolio has created liquidity challenges.

In response, innovations like continuation vehicles, nav loans, and minority purchases have emerged,

but these tools come with their own complexities and incentive misalignments.

Private equity portfolios today. Private equity portfolios today.

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