Deal activity in private equity has slowed significantly from 2021 due to high interest rates and economic uncertainty.

Private markets have been viewed by institutional investors as key to a well-diversified portfolio. Benefits of these strategies: long-term outperformance over public markets, with increasingly important diversification benefits as the universe of publicly traded stocks continues shrinking and performance becomes increasingly concentrated to a few mega-cap tech companies.

It is important for investors to properly assess a private equity fund’s waterfall, or the allocation of distributions between the GP and LPs, in order to ensure proper alignment of interests.