Private equity remains a core allocation for long-term investors seeking exposure to high-growth private companies. We believe that through active ownership, strategic operational improvements, and disciplined entry valuations, private equity can offer differentiated return potential versus public markets.  

In today’s environment, characterized by volatile capital markets and increased performance dispersion, experienced manager selection and thoughtful portfolio construction are paramount.¹ At IEQ Capital, we prioritize access to high-conviction sponsors and co-investment opportunities across the growth and buyout spectrum. 

Why Private Equity Remains a Focus 

Attractive Valuations Relative to Public Markets: Private markets have experienced more consistent valuation discipline in recent years compared to public equities. The slower pace of valuation recovery has created compelling opportunities to invest in quality companies at more favorable entry points for investors with long time horizons.¹ 

Companies Are Staying Private Longer: Many innovative companies are delaying their public debuts, choosing instead to scale in the private markets. ² We believe this shift means a growing share of value creation is occurring prior to IPO, accessible only through private markets. 

Deal Activity is Recovering: Despite the market re-pricing in 2022 and 2023, overall transaction volume in private equity improved meaningfully in 2024. Total announced deal value reached $565 billion, up 25% from the prior year. Exit activity also increased 20% over the same period. Deployment accelerated through the year, with capital invested in the second half of 2024 growing 23% over the first half. This momentum has continued into 2025, supported by a more constructive rate environment, increased dry powder levels, and growing confidence among sponsors and strategic buyers.³ 

Private Equity Strategy for UHNW Investors 

Access to Experienced Managers: We believe manager selection is a critical driver of success in private equity. IEQ Capital partners with sponsors who demonstrate consistent value creation, differentiated sourcing, and deep operational capabilities.⁴  

Operational Engagement: We seek managers who actively improve portfolio company performance, enhancing leadership teams, driving operational efficiencies, and guiding strategic initiatives to unlock value and manage downside risk.⁵ We believe this can create the opportunity to drive value in an idiosyncratic way, rather than simply relying on broader macroeconomic conditions to drive returns.  

Targeted Co-Investment and Direct Opportunities: IEQ selectively pursues co-investments and single-asset transactions that offer attractive pricing, durable business models, and exposure to high-conviction themes, all while maintaining alignment with top-tier sponsors. 

Diversification by Stage and Strategy: Our clients access a broad range of private equity strategies, from venture and growth equity to middle-market and large-cap buyouts, designed to provide exposure to innovation and long-term value creation across economic cycles. 

“Private equity enables our clients to participate in the innovation economy and potentially capture long-term value beyond the public markets. Through rigorous manager and investment selection, and careful evaluation of structural considerations, we provide differentiated access to companies that we believe are positioned for growth.” — Scott Gutterman, Managing Director at IEQ Capital 

Liquidity Management in Private Equity 

Private equity commitments typically involve multi-year capital calls and extended holding periods.⁶ For long-term investors, this illiquidity may be a feature, not a flaw, potentially enabling sponsors to execute value-creation strategies without pressure from quarterly earnings cycles. That said, careful liquidity planning remains essential. 

We believe thoughtful pacing across vintage years and proactive reserve planning for capital calls can help maintain balance sheet flexibility while capturing the return potential of the asset class.⁷ 

How Private Equity Fits into a UHNW Portfolio Strategy 

In our view, private equity serves as a strategic complement to public equity and other asset classes. For qualified investors, it offers the potential for alpha generation, enhanced diversification, and access to innovation that may be less available in public markets.⁸ 

We evaluate private equity as part of a total portfolio framework, considering each client’s liquidity needs, tax situation, legacy holdings, and long-term objectives. For many UHNW families and institutions, this holistic approach can enhance risk-adjusted outcomes over full market cycles.⁸ 

Evaluating Fee and Structural Considerations 

Net-of-fee performance is a critical lens for evaluating private equity managers. While fees vary by strategy and structure, we prioritize alignment of interests through: 

• Preferred return hurdles and clawbacks. 

• Transparent economic terms and reporting. 

• Access to co-investments and fee-efficient vehicles.⁴ 

We believe these structural elements, alongside manager quality, play a meaningful role in long-term returns. 

Emerging Private Equity Access Trends for Sophisticated Investors 

As the private equity ecosystem matures, new avenues for exposure are becoming increasingly relevant. These include: 

• Continuation vehicles that extend ownership of high-quality assets. 

• Secondary market transactions offer potentially attractive pricing and vintage diversification. 

• Direct investments and co-investments that enable target exposure and economic efficiency. ⁹ 

We believe these next-generation strategies can enhance flexibility, mitigate the J-curve, and unlock incremental value for qualified investors. 

“Our investment research team conducts deep diligence across the private equity landscape to identify sponsors who combine domain expertise with a proven ability to partner with portfolio companies. We look for managers who not only drive operational value but also collaborate with businesses to position them as market leaders. These relationships help our clients access growth while managing risk.”  – Colin Mark-Griffin, Managing Director at IEQ Capital  

Risks to Consider 

Private equity is a long-term, illiquid investment strategy. Key risks for qualified investors include but are not limited to: 

• Macroeconomic shifts that may impact valuations and exit timing. Private equity businesses are exposed to risks beyond their control, including prevailing macroeconomic conditions, interest rates, inflation, and the health of capital markets more broadly.  

• Manager and deal selection variability that can influence performance. Private equity exhibits more concentrated portfolios and a high degree of dispersion between managers, creating risk that any one manager may materially underperform other managers of the same vintage year.   

• Company-level execution risk tied to operational challenges or strategic missteps. Operational improvements are typically a material driver of underwritten returns, and there is no guarantee that a manager will be successful in their efforts.  

• Illiquidity and risk of timing delays. The ability to exit a private equity company is often tied to factors beyond a manager’s control, and return of capital may be significantly delayed if M&A or IPO activity is not conducive to portfolio company exits due to broader macroeconomic conditions.  

We believe a disciplined underwriting process and partnerships with experienced sponsors are essential to navigating these risks effectively.¹⁰ 

Conclusion

We believe private equity remains a foundational allocation for sophisticated investors. In today’s market, characterized by tighter capital availability, increased competition, and greater dispersion, we believe access to the right managers and value creation playbook is critical. For qualified investors seeking long-term growth, innovation exposure, and differentiated return potential, we believe private equity continues to present compelling opportunities. 

We invite you to speak with our investment team to explore how private equity may align with your portfolio objectives. 

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Definitions 

• A hurdle rate in private equity (also referred to as a “preferred return” or “required rate of return”) is the minimum return that the fund must achieve for investors before the general partner (“GP”) or manager can share in the profits.¹¹ 

• Clawback Provision: A clause that requires the GP to return part of their performance fees to the investors if the waterfall schedule results in the GP receiving more of the sales proceeds than their prescribed share under the investment agreement. ¹² 

Sources 

1. BlackRock, 2024 Private Markets Outlook. 
2. Moonfare, Private Equity Landscape, February 2025. 
3. EY, Private Equity Pulse Q4 2024. 
4. PitchBook, 2025 U.S. Private Equity Outlook, January 2025. 
5. Bain & Company, Global Private Equity Report 2024. 
6. McKinsey & Company, Private Markets Annual Review 2024. 
7. Hamilton Lane, 2024 Market Overview: Private Markets Liquidity Planning. 
8. Cambridge Associates, Portfolio Construction in a Diversified Private Equity Strategy, 2023. 
9. Preqin, Future of Alternatives Report 2025. 
10. CFA Institute, Private Equity Risk and Due Diligence Guide, 2023. 
11. Moonfare, Hurdle Rate (Preferred Return), 2025.  
12. Moonfare, What you need to know about private equity fee structures, 2023. 

Equities 

• Interest Rate Risk: Higher interest rates may adversely impact equity valuations. 

• Macro Risk: Macro factors including interest rates, inflation, or economic growth may lead to materially different return outcomes for the sector, particularly if there is a material impact to earnings outlooks. 

• Mark to Market Risk: Equities are relatively volatile securities and may be especially volatile in a poor macro backdrop. 

Past performance is not indicative of future results. An investment represents a high level of risk.  An Investor should be prepared to bear the risk of a total loss on his/her investment. An investment on behalf of other clients in a specific asset class does not mean that it is a suitable or advisable investment for you. IEQ typically charges different fees for different asset classes and thus may have an incentive to recommend certain asset classes over others. Forward looking statements/return projections are not statements of facts but merely an expression of opinion and belief. You are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. Nothing herein constitutes investment, legal, tax, or other advice.