Recent years in private equity were of increasing investments, strong exit markets, attractive returns and hot fund-raising activity. All these positive market characteristics attracted much attention resulting in structural challenges for the PE industry. One all-time high follows the other which results in significantly high fund raises and extraordinary high multiples.
But how to differentiate oneself in a saturating or already overheating market? Especially general partners try to further optimise their investment strategies via improved portfolio management or asset assessment. But this approach generates only very low margins in a historically competitive market. Highly leveraging investments and waiting for the management to get the job done by their daily manner to exit after 3-7 years is not

sufficient anymore in a market tending to overpriced assets and vanishing margins.
Some PEs try to specialize in specific segments or investment strategies to generate higher margins through higher efficiency. Whether actively engaging in the company’s business to support the corporate strategy and speed up organic growth or using digitalisation and technological development are currently common ways to escape the crowd’s difficulties.
PE is becoming an increasingly competitive business and is accelerated by fiscal policies and the growing economy.
What will the future hold for Private Equity? Heating up or cooling down?