The private equity industry has over time matured with fewer opportunities to grasp low hanging fruit. Average buyout returns have steadily declined over the past three decades.
This calls for a differentiated approach to identify those that are able to outperform their peers. In this WTW paper, several key considerations are outlined that are vital in managing a successful private equity investment programme:
- A diverse line-up of a small number of high-conviction bets to avoid the peril of over-diversification
- Understand key megatrends and how they shape sectoral exposure
- Exploit both extrinsic and intrinsic drivers to achieve alignment of interest
- Leverage the size of commitments to seek better terms wherever feasible
- Sustainable investment considerations are embedded in the investment process and decision-making
- A well thought out and executed co-investment solution complementary to primary fund investments
- A commitment to innovation
