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Dry Powder: The Private Equity Podcast

Is the Classic Buyout Model Still Working?

We consider a critical question from this year’s Global Private Equity Report.

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Is the Classic Buyout Model Still Working?
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We cover a lot of ground in Bain’s industry-leading private equity report, but today on Dry Powder, we’ll linger on one of the report’s more thought-provoking questions: Is the classic buyout model still working?

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Taking a 10-year view, assets under management held by buyout funds have grown at a 7% compound annual rate. However, for nonbuyout assets, the growth rate is 17%—which means that, while the classic buyout model is still quite healthy, other types of assets are taking share. It’s the “specialist funds,” as we call them, that have been growing much more rapidly over the past five to seven years.

These strategies have been hotly pursued by megacap funds at the top of the market and emerging managers at the bottom, and classic fund managers are feeling caught in the middle. Many are asking themselves some pretty fundamental questions about whether they need to change course to get out of the middle of the road.

Today on the show, we’ll consider whether the middle is the most comfortable place to be or whether private equity firms should pursue more specialized strategies to drive differentiation and create more value.

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