Private Equity

Private equity refers to ownership stakes in companies that are not listed on public stock exchanges. Rather than buying shares on the open market, investors typically gain access through private funds, direct investments, or funds of funds managed by specialized firms. These vehicles pool capital to acquire, build, or restructure private businesses over a multi-year holding period before eventually selling or taking them public.

In our experience, one of the most important shifts investors should understand is that fewer large companies choose to go public, or stay public, than in decades past. There are meaningfully fewer publicly traded companies in the U.S. today than there were in the late 1990s, even as the overall economy has grown. Many companies now raise capital and scale for years, sometimes for their entire lifecycle, while remaining privately held.

That matters because a portfolio built entirely from public equities may increasingly miss a substantial and growing share of where value is being created across the economy. Private equity can help connect the dots between a client's public market exposure and the broader opportunity set available to investors.

Beyond access, private equity may also offer:

• A potential illiquidity return premium. Because capital is locked up for years rather than available on demand, private equity has historically aimed to compensate investors for that reduced flexibility relative to public markets.
• A different volatility profile. Private company valuations are not repriced daily based on public market sentiment, headlines, or short-term trading activity, which can smooth the emotional experience of investing, even though the underlying business risks have not gone away.

Private equity is not a fit for every investor or every portfolio, and it is important to go in with clear eyes about the tradeoffs involved.

• Illiquidity. Capital committed to private equity is typically inaccessible for a period of years. Investors should only allocate capital they will not need in the near term.
• Higher investment minimums. Private equity vehicles often require larger commitments than a typical public market investment, which can limit accessibility.
• Less pricing transparency. Without daily quotes, valuing a private equity holding requires more judgment and periodic estimates rather than a real-time market price.
• Manager selection matters. Outcomes in private equity can vary significantly from one fund or sponsor to the next, which makes thoughtful due diligence an essential part of the process.

A properly structured financial plan considers how private equity, alongside public equities, fixed income, and other strategies, may fit within a client's broader goals, time horizon, and liquidity needs. We believe this is best evaluated as part of a coordinated conversation about your full financial picture, not as a standalone decision.

Private equity investments involve substantial risk, including illiquidity, limited transparency, valuation uncertainty, and the potential loss of principal. They are generally available only to accredited or qualified investors and are not suitable for all investors. Past performance is not indicative of future results. Investors should carefully review all offering documents and consult their advisor before investing.