The private equity (PE) industry is constantly changing as a result of bear and bull markets, government legislation, business trends, globalization, and many other factors. Another major trend is the increasing specialization of firms. “The proliferation of sector-focused funds continues and we don’t expect that to change,” says Andrea Auerbach, managing director and global head of private investment research at Cambridge Associates and co-author of the Declaring a Major report. “The industry is over 30 years old now and continues to evolve towards specialization. Our data shows firms with sector specialization have a competitive advantage.” A second trend is the increasing use of data analytics, artificial intelligence, and blockchain technology (which can be defined as a distributed ledger database that maintain a continuously-growing list of financial records that cannot be altered) to improve efficiency, better ensure the accuracy of data, and solve other problems both in-house and at portfolio companies. Finally, large PE firms—such as The Carlyle Group and Blackstone—are launching buyout funds that have a longer holding period than the traditional three to five years. These funds have expected holding periods of 10 to 15 years. “Such patience…presents an opportunity to generate higher returns on committed capital over the long haul,” according to Forbes. These are only a few of the trends and developments that will shape the future of the industry.
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