This what Ted's thinking,

deconstructing private equity, portfolio construction for the post-distribution drought,

discusses what private equity commitments might look like for institutions after the current

logjam receipts.

The movies from my teenage years foreshadowed the topsy-turvy world of today's private equity

industry.

Back then, we heard about strange things afoot at the Circle K in Bill and Ted's Excellent

Adventure and dogs and cats living together in Ghostbusters.

Today, the lack of distributions and secondary sales from longstanding leaders are strange

things in the industry, and the convergence of public and private assets might feel like

dogs and cats living together.

I've been thinking about what commitments from LPs will look like on the other

side of this logjam. Spoiler alert, expect a meaningful haircut in institutional commitments

with inflows from private wealth offering the possibility of filling the gap. None of this

should come as a surprise. Five years ago, in the Day of Reckoning for

Private Equity, I suggested we had already hit peak returns, but that it would take a while to

show up in the numbers. At the beginning of this year, before Liberation Day, I discussed why

distributions are unlikely to catch up with new money

in the ground for several more years in when will private markets normalize.

Institutional commitment models.

As Hugh MacArthur at Bain & Company noted on a recent Capital Allocator's podcast, distributions

as a percentage of invested capital held steady

...