It is a multi-year trend, with the total assets under management in private markets at US$13.1 trillion in mid-2023, with just over US$1 trillion raised during the year1.
For entities like private equity and VC firms, which hold illiquid assets (e.g., investments in startups and other private companies), AUM reflects the amount of capital they've successfully raised from their Limited Partners, such as pension funds, endowments, and funds of funds.
Private equity market - a current snapshot
According to Preqin - a research house specialising in alternatives - the global private equity market surpassed $4.74 trillion at the start of 2021¹.
Definition of the 80-20 Rule
In the context of private equity, this means that a limited number of investments typically account for the majority of returns. Investors leverage this rule to optimize their strategies and focus on the most impactful opportunities, ensuring that their resources are allocated efficiently.
The estimated total pay for a Vice President Private Equity is $321,060 per year, with an average salary of $181,869 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
It suggests that the sum of a company's top line year over year growth rate (annual recurring revenue growth percentage) and its EBITDA margin should ideally be at least 40%. This rule helps buyers and investors evaluate whether a company is effectively balancing growth with profitability.
Blackstone is the world's largest alternative asset manager, with more than $1 trillion in AUM. We serve institutional and individual investors by building strong businesses that deliver lasting value.
Private Equity Mega-Fund Definition: The “mega-fund” PE firms tend to have ~$100 billion or more in assets under management (AUM) and individual fund sizes of $10-15+ billion, and they execute deals with an average size of $1+ billion; these firms are also highly diversified in terms of geographies, industries, asset ...
Private Equity Accounts for 40% of US M&A Deals, Feds Say (1) Two out of every five major US mergers and acquisitions in 2022 involved private equity investors, a percentage that has steadily grown over the past two decades.
BlackRock, Inc. is an American multinational investment company. Founded in 1988, initially as an enterprise risk management and fixed income institutional asset manager, BlackRock is the world's largest asset manager, with US$11.5 trillion in assets under management as of December 31, 2023.
AUM calculation is straightforward, you need to multiply the number of shares or units held by investors by the current market price of each share or unit. Then, add up the total value of all shares or units.
Putting the PE trend in context
There is important context to these trends. First, note that the market capitalization for public U.S. companies listed on the NASDAQ and NYSE exchanges was about $54 trillion as of March 2024 – compared to $3.5 trillion held in domestic private equity funds at the end of 2023.
Fund size in mutual funds, also known as Assets Under Management (AUM), is the total value of all the assets that a mutual fund manages on behalf of its investors. This includes the capital invested by individual and institutional investors.
The Rule of 72 is a convenient method to estimate the approximate time for invested capital to double in value. By merely taking the number 72 and dividing it by the rate of return (or interest rate) expected to be earned, the output is the approximate number of years for an investment to double.
Key Takeaways
Two refers to the standard management fee of 2% of assets annually, while 20 means the incentive fee of 20% of profits above a certain threshold known as the hurdle rate.
While BlackRock is renowned for its leadership in public markets with over $10 trillion in assets under management (AUM), Blackstone has established itself as the leading player in private equity, real estate, and alternative investments, managing $1 trillion AUM.
Private equity firms often require a minimum investment of between $10 million and $25 million up front. If you qualify as an accredited investor and have the capital, the next step is to contact private equity firms and start looking for firms that match your interests.
A good EBITDA growth rate varies by industry, but a 60% growth rate in most industries would be a good sign.
The rule of 70 can help give you a rough idea of how long it might take for your investment to double in value. Let's say you've got a portfolio that you expect could potentially return 6% annually. The rule of 70 tells us that your investment would hypothetically double in about 11.7 years (70 / 6 = 11.7).