[hogFeast]

Not really. PE is mainly a vehicle for smart Wall Streeters to fleece credulous and incompetent pension fund managers.

But the latest boom in PE is a function of: higher than usual levels of credulity around private vs public performance (but PE funds have lower volatility???), and the wave of free money coming out of the Fed. In 2010, lots of PE funds got bailed out after making unbelievably bad bets with no economic rationale (the worst being Blackstone Real Estate, they should have gone bust, they now manage $250bn in RE).

Tech companies are hot right now because of Vista Equity's numbers. Tech companies appear nominally attractive in cash flow terms because so many tech companies pay staff non-cash. So you can acquire at an unreasonable multiple, load up with debt, and then leave employees holding your bags if it goes wrong...self-evidently though, no actual value is being created here beyond playing the capital cycle.

Most of the growth in PE is correlated to the growth in investors (both in the funds, and financing) who don't understand what they are doing. If you look at Europe, private equity activity has exploded higher with money-printing from the ECB and the growth in direct lending/leveraged loan markets (these have gone from 20bn to 150bn in five years or so...where it was in 2007, and lots of very unsophisticated private debt funds with poor incentives). Shadow banking all over again, no-one knows where the money is coming from, no-one knows where it is going.