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Different thinking: Private firm equity competitors

Alternative investors with a long-term view can beat private equity firms at their own game when it comes to management incentives. PwC’s Tim Sydor, Lisa Wootton and Emma King explain how internal markets for shares work

Private equity (PE) fundraising hit record highs in 2017 and, despite a slight drop off in 2018, there are record levels of dry powder remaining that can be invested. In addition, the lines between styles of investment are blurring.

Increasing numbers of new competitors are entering auctions for private companies, traditionally dominated by PE houses. These new competitors include alternative investors with longer investment horizons, such as listed buyers or industry competitors, pension funds, sovereign wealth funds and family offices. They often have common characteristics that contrast with traditional PE. Primarily, they are not necessarily looking to exit an investment after three-to-five years, so perhaps can be considered more ‘patient capital’.