Why Private Equity

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Why Invest in Private Equity?

When companies stay private, they don’t have to report to shareholders or divulge their strategies or finances. That may be why the number of U.S. public companies has fallen by nearly 50% since the 1990s.1  With more than 85% of U.S. companies with revenues over $100 million being private, many of the best growth opportunities are inaccessible to the vast majority of individual investors.

Understanding the Private Markets

NUMBER & SIZE OF PUBLIC COMPANIES
50% reduction in the number and 8x increase in the size of public companies over the last 25 years.1

 

LESS THAN 15% OF COMPANIES WITH REVENUE OVER $100 MILLION ARE PUBLICLY HELD
The number of public companies has been declining, leaving investors unable to access a significant portion of the U.S. economy.2

Family offices and institutional investors such as pensions, foundations, and endowments, have long recognized the benefits of investing in private markets, such as the potential for enhanced returns, income generation, lower correlation, and diversification.3 Allocations to private equity of 15% to 40% or more are common among these large, sophisticated investors.

America’s Middle Market – An Untapped Powerhouse

In 2021, private equity invested over $1 trillion in companies across America, spanning every sector, including healthcare, energy, information technology, materials & resources, hospitality and many more.6

America’s middle market companies – those typically viewed as having annual revenues between $10 million and $1 billion – make up more than 30% of the U.S. economy, but because most are privately owned, individual investors may miss out on opportunities to invest.5

– Middle market businesses account for about one-third of the U.S. economy.5
– Approximately 48 million Americans are employed by middle market companies.5
– There are nearly 200,000 middle-market firms in the U.S. and most tend to be privately owned or closely held.5

Could Private Equity Become as Popular as Public Equity?

Expanding access to private markets allows individuals to consider opportunities currently outside their reach and may result in better portfolio outcomes. With education about the risks and considerations of investing in private markets, coupled with the increased availability of high-quality investment opportunities, we believe private equity could become as commonplace in investor portfolios as public stocks and bonds.