Letter from Hugh MacArthur: The Search for Certainty

This letter introduces Bain’s 2020 Global Private Equity Report.

Dear Colleague:

The beat goes on. Despite growing macroeconomic and political uncertainty across global markets, the private equity industry continues to make and sell investments, raise capital and generate relatively strong returns.

Yet, the private markets also continue to throw up challenges. Prices set all-time highs in the US and remained near record levels in Europe, raising the bar for investors looking to create value. Holding periods declined as investors attempted to take advantage of higher prices on the sell side and exit before any impending recession. Fund-raising remained healthy, but the market skewed to larger, more experienced investment firms. And, while returns were attractive, they continued to come under pressure as the industry matured and competition intensified.

In this, Bain’s 11th annual Global Private Equity Report, we examine the industry’s strengths and challenges, and the evolutionary path that lies ahead. In addition to the critical statistics that characterized PE performance in 2019, we take a thorough look at key strategies the best firms are using to gain a competitive edge, and discuss an important milestone in the industry’s relatively short history.

The past year marked the first time ever that 10-year returns in the public markets matched those for private equity. To be sure, the US has ridden a tremendous bull market for public and private assets over the past decade, but what does return convergence mean for the future of private equity? And why didn’t the same phenomenon show up in Europe? In Section 3, we join with Harvard Business School professor Josh Lerner, State Street Global Markets and State Street Private Equity Index to weigh the significance of this unique moment in time and its implications for investors and limited partners.

In Section 2, please look for our assessment of PE investments in the technology space and how smart investors manage risk. We also double-click into the payments industry to discuss how investors are making money there today vs. a decade ago and examine how firms are using sophisticated pricing strategies to enhance top-line growth.

We take an in-depth look at ESG and the topics of sustainability and impact investing. Environmental, social and governance investing has been around for years, but many firms are finding they need to incorporate sustainability much more explicitly into their investment strategy to meet the needs of limited partners—and, indeed, to make more money on their investments. Can they truly do well by doing good?

Disruption has been a key theme for several years. Everyone knows it is occurring in more and more industries and at an increasing pace. But how do you use due diligence to gauge the likelihood for disruption in a specific industry? And how do you determine its potential timing and impact? Turn to Section 2 for Bain’s answer.

I have no doubt that 2020 will be another busy and exciting year for the PE industry. Investors will continue to grapple with how to repeatably create alpha in changing conditions, amid more competition. We at Bain look forward to continuing the discussion with our friends across the industry’s ecosystem.

  • Acknowledgments

    This report was prepared by Hugh MacArthur, head of Bain & Company’s Global Private Equity practice, and a team led by Johanne Dessard, director of Bain’s Global Private Equity practice.

    The authors thank Josh Lerner, the Jacob H. Schiff Professor of Investment Banking at Harvard Business School; State Street Global Markets; and State Street Private Equity Index for coauthoring Section 3 of the report.

    They are grateful to Mike McKay and Brenda Rainey for their contributions and input; Jonny Holliday, Christopher Perry, David Lipman, Cindy Skaruppa, Christian Buecker, Syed Ali and Daniel Doud for their perspectives on technology investing; Chris Bierly, Iwona Steclik, Jason Slocum, Axel Seemann, Jean-Charles van den Branden and Joy McConnochie for their perspectives on ESG and impact investing; Justin Miller, Tim Cochrane, Michael Cashman, Glen Williams and Justyna Nowicka for their perspectives on the payments sector; Ron Kermisch, David Burns, Mark Burton, Peter Jackson, Nathan Hamilton, Wade Cruse and Chris Cooley for their perspectives on B2B pricing; Christophe De Vussser, Dunigan O’Keeffe, Richard Lichtenstein, Deike Diers, Eser Tireli and Alice Leonard for their perspectives on disruption; Henrik Poppe and Thomas Gerber for their insights on P2P and IPO dynamics; Karen Harris for her insights as managing director of Bain’s Macro Trends Group; Enrique Parra, Miguel Lopez Bernal and Brandon Tieu for their analytic support; Emily Lane and John Peverley for their research assistance; and Michael Oneal and John Campbell for their editorial support.

    The authors are also grateful to Cambridge Associates, CEPRES, Oliver Gottschalg, PitchBook, Preqin, and Jason Mao of State Street Global Markets and State Street Private Equity Index for the valuable data they provided and for their responsiveness to our special requests.

    For more information about Cambridge Associates’ fund and investment-level benchmarks, contact For more information about CEPRES, visit or contact For more information about Oliver Gottschalg’s PE fund analytics firm, PERACS, visit For more information about PitchBook, visit or contact For information about Preqin, visit or contact For more information about State Street Global Markets and State Street Private Equity Index, contact

Private Equity Report

This article is part of our 2020 Global Private Equity Report.


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