Private Equity 4.0: Reinventing Value Creation

1 Private equity: from “alternative” to “mainstream” asset class?

Executive summary

Every day one reads about the latest private equity threat to a corporate icon. Some lament these threats, while others rejoice that at last an independent force has come in to shake up some lazy corporate assets. Private equity has been around for decades. However, in the years before the 2008 financial crisis, private equity funds gained the power to take on virtually any corporate target they chose. Some became household names—Kohlberg Kravis Roberts & Co. (KKR), Carlyle, and Blackstone from the US, Apax, Permira and CVC in Europe—just the most glamorous among the thousands of private equity funds in operation around the world. The trillion-dollar industry was bound to make some waves when it jumped into the corporate pool…

Whilst the basic principles of private equity have been around for a long time, the explosive growth of the industry is a relatively recent phenomenon. And with size comes a comprehensive “coming of age”, including a broader geographic coverage. While the US remains by far the largest market, some Asian markets are gaining in popularity, with their share in global fundraising expected to reach 20% soon.

As deal size increased, the very large transactions caught the attention of the media, politicians and regulators. Inconsiderate compensations started to generate popular ...