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I understand that the majority of equity is coming from LPs but that's not the point I was making. The way the author framed it sounded like the deals were 90% debt and 10% equity which is not the case.

It depends on the size of manager and I've seen GP commits range from 1% to 10%. The largest dollar commitment I've seen is in the ~$500m ballpark....either way what matters is whether the GP commit is meaningful in terms of their own net worth due to alignment of interest. Again this is not a black and white issue....some GPs do have skin in the game.

Most people do not understand debt including the author...at the moment, debt is so darn cheap, tax-effecient and covenant-lite that it's almost free money.... I would rather be on the equity side of the equation then be a lender....whether that would be a bank or high yield/junk bond investor.

I would argue that raising a PE fund is asymmetric for the manager since heads: I earn plenty of carried interest....tails: I get fat from the management fees and hold onto the portfolio companies for as long as I can (~10 years).

Which segment of the PE market are you refering to? What do you mean by financial engineering? I've spent a lot of my time in the US LMM and I see plenty of value creation/professionalization of small businesses. That said, I appreciate the fact that that kind of work is harder to do at the larger end...and it's more about the leverage, buying right with the right secular trends etc. Again not black and white....

For example on job creation:

"We find that the real-side effects of buyouts on target firms and their workers vary greatly by deal type and market conditions... This conclusion cast doubts on the efficacy of 'one-size-fits-all' policy prescriptions for private equity."

If I was to use an analogy with regards to the article, its as if someone tried describing the entire software industry to an outsider by only refering to Microsoft, Google and IBM...what about the rest of the industry?

[0] Pro Rata https://www.axios.com/newsletters/axios-pro-rata-ed716a8a-37...






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