Discusses The Following
- typically have lower volatility than private equity - due to infrequent and self-determined valuations (no daily price like public markets)
Examples of Public Equity
- Investments in private startups
- Investments in Private Equity Funds
- Investments in non-public LLCs and partnerships
Massive Expansion After 2008 Financial Crisis
- Private Equity assets grew 7x after the 2018 Financial Crisis (circa 2020)
- Driven by desire for higher returns and lower volatility (thanks to infrequent asset valuations vs. public market real-time valuation)
- Resulted in private equity firms being more competitive and paying higher prices
- Debt levels have increased (higher EBITDA multiples) & loan covenants have decreased
- Banks have limited loans (too risky with high ration). Private debt markets have taken over