Private Equity Fund Managers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 24,200 portfolio management firms in the US includes private equity (PE) fund managers who invest in the stock of companies that are not publicly traded. PE funds typically take a significant stake in portfolio companies that allow them to influence or control management and governance.
High Risk, High Reward
As a long-term investment, private equity funds offer higher risk and higher reward compared to more traditional asset classes.
Dependence on Debt
Private equity firms are heavily dependent on debt to finance acquisitions.
Industry size & Structure
The US private equity fund management industry is part of the portfolio management industry. The average portfolio management company employs 9 workers and generates about $13 million annually.
- The US portfolio management industry consists of about 24,200 firms that employ about 220,200 workers and generate $314 billion annually.
- The global private equity industry held about $4.2 trillion in assets under management in 2021 and $1.3 trillion in “dry powder,” or cash reserves, according to Preqin.
- The global private equity industry is concentrated; about 45% of the aggregate capital raised in 2019 was secured by the 20 largest funds, according to Preqin.
- The North American PE market is the largest in the world and accounts for just under half of global deal value, according to Bain. Other important PE markets include Europe and China.
- Large firms with private equity operations include the Carlyle Group, Blackstone Group, KKR, Apollo Global, and TPG. Large firms are often diversified, manage different types of assets, and typically have operations throughout the world.
- US PE firms closed on $343 billion across 405 funds during 2022, according to PitchBook. Estimated deal value for US PE firms totaled $1 trillion.
Industry Forecast
Private Equity Fund Managers Industry Growth
Recent Developments
Sep 12, 2023 - Funds Increase Fees Moderately
- Private equity fund managers moderately increased their prices in the first half of 2023. Industry employment and wages for nonsupervisory employees increased slightly during the period.
- Wealthy US families increased their holdings of bonds and private equity investments in the first half of the year while reducing their stock exposure, according to a survey by Citigroup's private bank. More than half of the 268 family offices polled, accounting for a combined net worth of $565 billion, increased their allocations in fixed income, while 38% boosted their private equity holdings. About 38% reduced their allocation in stocks. The shifts were the largest since Citigroup began the study in 2020. "Family offices are focused on high-quality companies in traditional industries, with positive cash flows," said Hannes Hofmann, who runs the global family office group at Citi Private Bank.
- Sixteen private equity portfolio firms declared bankruptcy in the first 2½ months of 2023, according to S&P Global. Bankruptcies by private equity portfolio companies will be on track to total nearly 78 by the end of 2023 if the pace continues, more than double the totals in 2021 and 2022 and the second-highest number of portfolio company bankruptcies in more than a dozen years. The data is an indicator that business restructurings, including out-of-court arrangements, are rising in general to lighten the debt loads of companies struggling through macroeconomic headwinds, said Michael Handler, a partner in the financial restructuring practice of law firm King & Spalding. "Not only do you have higher cost of capital, but you have more uncertainty in the forecast — the ability of the [portfolio] company to meet its targets. It's a one-two punch," Handler said.
- The US Securities and Exchange Commission approved rules that require private equity funds to privately tell US regulators about extraordinary investment losses and major margin events within three days of such event occurrences. Funds generally had to report positions in quarterly public filings before the rules were passed. The rules update so-called Form PF, which was put in place following the financial crisis of 2008-2009 to monitor risks in the private fund sector and boost the quality of disclosures by large funds about their investment strategies and leverage. Both large private equity fund advisers and hedge fund advisers with at least $1.5 billion in assets under management will be required to file special reports within 72 hours or “as soon as practicable,” to inform the agency of the occurrence of certain events indicating “significant stress at a fund that could harm investors or signal risk in the broader financial system.”
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