Mod note (Andy) make sure to see the response below by
Marcus_Halberstram: "The main driver, IMO, for diversifying away from pure PE and into other alternative and conventional asset classes is that there is a very clear and distinct shift in the PE business model away from the 20 and towards the 2. In my view, this is for 3 reasons..."
I'm starting business school this year and don't plan on coming back to PE, so I don't really care who the "most prestigious" PE firm is. However, I thought I'd offer some perspective as someone who has worked on the buyside for two years, especially since lots of college students on this forum don't really seem to appreciate how much things have changed over the last 10 years.
***Based on some of the responses, I just want to clarify that I am by no means claiming to be an authority on PE firms. I've worked at one firm for only two years, so most of what I'm saying is not going to be new to anyone in the industry. A lot of it is also hearsay, so feel free to disagree.
My general sense is that PE has become an increasingly commoditized business. People say that the days of generating returns through financial engineering are over, but operational improvements don't seem to cut it either when everyone just outsources to the same consulting firms. The easily fixable businesses have been picked clean, and things like group purchasing organizations are nothing new. Bankers are also there to make sure that every sellside process is as competitive as possible. If you've received a teaser about a company, you can be sure that every single one of your competitors has as well. Funds that used to return 30%+ back in the 90s and early 2000s now consider 20% to be a win.
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