Private equity turns 50 this year. The paper argues today’s record-long distribution drought is partly about rates, but more about scale: as firms grew, incentives shifted from performance-driven carried interest to AUM-driven enterprise value, making it rational to hold assets longer.
It explains how continuation vehicles, NAV loans and GP stake sales act as “relief valves,” creating a “New Exit Game” that preserves fee-generating assets while offering liquidity. It also highlights the “Streetlight Effect”: headlines track the largest firms and miss thousands of smaller managers. For lower middle market, specialist and emerging managers, the original buy-improve-sell model still works today.
