The last few years have been a challenging stretch for many private equity (PE) investors. Yet amid frustrations over reduced exit activity, diminished distributions to limited partners (LPs) and a generally tougher fundraising environment, we believe PE remains a cornerstone asset class, with the flexibility and resilience to weather negative tariff impacts while delivering attractive risk-adjusted returns and long-term portfolio diversification.
In this new collection of charts, we aim to offer illuminating perspective on the significant opportunities and ongoing risks facing PE sponsors and their investors.
Key observations, in our view, include:
- PE portfolios may be less sensitive to tariff uncertainty. We believe PE portfolios tend to have lower direct exposure to tariff-sensitive sectors compared to the broader economy, potentially mitigating tariff-related disruptions.
- Operational excellence remains an advantage for PE. In the face of macroeconomic uncertainty, PE managers continue to demonstrate the flexibility and operational skill that have delivered long-term outperformance versus public-equity markets.1
- Market disruptions could open the door to alternative capital providers. Demand for liquidity among PE sponsors and their LPs could create attractive opportunities for complementary sources of private capital, including mid-life co-investments, GP-led continuation funds and custom capital solutions.
For a closer look at the potential opportunities and risks across the current PE landscape, please see the presentation below.
