Over the past decade, the private equity industry has been through the throes of volatility and change. It began, in 2006, with the largest deal-making boom in the history of the industry. This boom was followed, two years later, by the financial crisis and the worst recession in 70 years. By 2010, there were real concerns that many portfolio companies— and, indeed, PE firms themselves—would go bust as a mountain of debt requiring refinancing, fund-raising dried up and times looked dire. But a funny thing happened on the way to perdition. The PE industry proved itself to be remarkably resilient over the decade’s second half. The debt mountain was refinanced and paid down, aided by the US Federal Reserve and European Central Bank reducing interest rates to near zero.The global financial crisis claimed many victims but barely put a dent in PE assets under management. 20% of assets under management affected after 2001, 6% of assets under management affected after 2008. PE’s vital signs remained healthy, although the aggregate figures retreated somewhat from the highs in 2013 and 2014. Exits in 2015 rode a tsunami of corporate merger and acquisition (M&A) activity as cash rich strategic acquirers set out to buy growth. PE returns once again began to widen their performance edge over the public markets, reinforcing investor confidence. Successive years of strong cash distributions supported LPs’ capacity to plow capital back into PE across every region of the world in 2015.

This is the holding of minority shares in the capital of an established and generally profitable business. The selected businesses have strong growth potential which requires a consolidated financial structure in order to develop new products or services, set up subsidiaries abroad, make an acquisition or increase their productivity.