Private equity is a burgeoning asset class for retail investors as interest in wider private markets increases, with Morgan Stanley among the firms expanding access.
But while PE deals may face challenges from tariffs, a new investment industry report hails the benefits of PE to the US economy and highlights the large number of Americans who are employed by PE-backed businesses.
The American Investment Council analyzed Pitchbook data and found that more than 13 million workers are employed by more than 21,000 PE-backed firms across the US, with the average worker receiving $85,000 in wages and benefits, an aggregate in excess of $1 trillion.
The peak year for PE growth investing was 2021 in terms of the number of deals (1,749) but 2024 saw a record high amount invested (almost $123 billion) with owners preferring PE involvement while retaining some amount of control and gaining capital often for expansion, tech upgrades, and skill development.
Older firms (20+ years) are an increasing focus for PE deals, perhaps unlocking capital for owners who are nearing retirement.
This is a factor seen in the wealth management industry where aging advisors may be looking at selling to PE investors, especially if they have no clear succession path such as heirs. John Orsini, director at MarshBerry, told InvestmentNews that a mindset shift among sellers is about de-risking, rolling equity forward, and betting on the next phase.
The success of the industry is also benefitting workers through offering profit-sharing programs and Employee Stock Ownership Plans which is contributing to wealth generation.
“Tens of thousands of private equity-backed businesses are empowering millions of American workers through high wages and ownership programs, creating wealth, fostering professional growth, and supporting local communities nationwide,” said AIC President and CEO Drew Maloney. “Our report shows how private equity is helping workers directly benefit from the value they help create, whether through equity, retirement security, or long-term wealth generation.”
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