Private Markets—From Alternative to Mainstream: Evolution during the Past 30 Years and Key Trends and Challenges for the Decades to Come

Private market investing has evolved dramatically during the past three decades, from small alternative allocations made by the most sophisticated investors into significant components of many programs’ strategic asset allocations. During this period, the number of publicly traded companies in developed markets has declined precipitously, accompanied by a substantial increase in the amount of economic activity taking place in private markets—financed by both equity and debt—and across corporate and real asset structures. This article surveys this evolution and describes its key drivers, including evolving investor behavior, disruptive innovations, financial disintermediation, and regulatory changes. It also looks to the future of private market investing, seeking to lay out the key trends likely to drive further growth: the pursuit of higher returns, continued innovation in the growing private markets ecosystem, and a blurring of the current public/private distinction as investors increasingly evaluate investments across a spectrum of liquidity.