The State of the Private Equity Industry—Is It All Down Hill From Here?



In the past private equity has been a solid way of investing taking in trillions of capital, but with the ever changing world we live in, what is the state of the industry? Private equity investments typically consist of money being placed in a company by venture capital firms, private equity firms or angel investors. These are companies that are not publicly traded on any stock exchange and typically they are looking to launch, grow or prepare for a buyout. The money invested is typically aimed at expanding or creating new products or in some cases to fund a restructuring of the company. Private equity is a powerful force in the success of private companies that are not publicly traded. So what is the state of the private equity industry?

The Private Equity Industry Is Healthy

To answer that question, I spoke with Jonathan Coslet, Chief Investment Officer, and Senior Partner of TPG Capital. Jonathan explained that the private equity industry, like all industries, “is maturing but the core raison d’etre for the industry is growing rapidly and that’s because of our core client, our pension funds and our sovereign wealth funds in particular.” Jonathan compared the private equity industry to state governments. He said whereas the average state government is getting about 7-8 percent annually on its investments, the average firm in the private equity industry has returned about 13 or 14 percent every year over the last 30 years. “So it’s been delivering very strong returns against a US stock market that’s maybe 7 or 8 percent. So the need for the pension funds, sovereign wealth funds and insurance companies endowments to outperform fixed income securities and regular way public equities is creating real demand for our services.” Because of these factors the industry is growing and today the private equity industry has about $2 trillion of capital under its control.”

Growth Investing

I asked Jonathan what investment strategies he prefers the most. He mentioned two generic approaches that he would take as an investor: growth and inflection.  He explained growth to be the following: “there’s going to be a lot of folks who are 65 and 85 or older so there’s going to be a huge demand for healthcare services. So that’s just a secular growth that’s driven demographically and I need to figure out which part of that sector I want to get in front of because it has the most growth and has a supply-demand imbalance.” It’s important to get in front of something with a growing demand while supply is still lagging because this gives you pricing power.

Inflection Investing

On the other hand, with inflection investing it’s not the slope of the curve, it’s the second derivatives, or the rate of change. “The slope is inflecting up so being in front of something that’s about to change and that usually means an industry that’s being disrupted in transition. It happens to be that healthcare has both characteristics: it’s growing and it’s changing.” When you look for something that has both growth and dynamic change together you find the “hot spots” of investing and if done right it can lead to tremendous success.

Check out my interviews with Jonathan Coslet below. For more interviews with Jonathan Coslet click here!

Jonathan Coslet- Investment Strategies


Jonathan Coslet- The State of Private Equity

Posted in
Nick Sonnenberg

Nick Sonnenberg – Founder of Leverage

Nick Sonnenberg, Founder of Leverage Leveraging Your Business Operations About Nick Sonnenberg   Nick Sonnenberg is the founder and CEO of Leverage, a business efficiency consultant, columnist and author of the upcoming book, Come Up For Air: How Teams Can Leverage Systems and Tools to Stop Drowning in Work. Nick’s mission is to create companies…

The New Bull Market

The New Bull Market

The New Bull Market This article is adapted from an exclusive interview with Robert Zuccaro, CIO of Golden Eagle Strategies, in August 2022.   Question: Right now, there are a lot of people scared saying that we’re on the brink of a recession, but you say that we entered a new bull market at the…

importance of honesty and integrity in business

Why Integrity is Key for Success in Business

Why Integrity is Key for Success in Business Integrity Means There are a few key reasons why integrity in business is so important for success in business: – Personal values such as integrity build trust with customers and clients. If you’re known for being trustworthy in your personal and professional life, people will want to…

Jim Kwik - Unlocking Your Brain's Limitless Potential

Jim Kwik – Unlocking Your Brain’s Limitless Potential

Jim Kwik Unlocking Your Brain’s Limitless Potential Jim Kwik knows a thing or two about learning. After suffering a traumatic brain injury as a child, Jim was faced with many challenges. He was teased by classmates and referred to as “the boy with the broken brain.” But Jim didn’t let his injury hold him back.…