For nearly 25 years, private equity has been the darling of Wall Street, consistently outperforming the stock market and attracting top talent with promises of eye-watering compensation. But the tides are turning, and this shift has major implications for anyone considering a career in the industry.
The End of an Era
Earlier this month, investment firm Hamilton Lane released data showing something we haven’t seen since the dot-com bubble burst in 2000: the stock market (measured by the MSCI World Index) has outperformed private equity returns. This marks a significant turning point for an industry that rode high on low interest rates and abundant capital for over two decades.
Apollo CEO Marc Rowan suggested last year that the industry’s stellar performance wasn’t due to exceptional investing talent but rather the result of expansive monetary policy. With that era of cheap money now behind us, the industry is facing a painful adjustment.
What’s Changed?
Several factors have contributed to private equity’s current challenges:
- Rising interest rates have made debt-financed acquisitions more expensive
- Company valuations remained stubbornly high, compressing potential returns
- IPO markets slowed dramatically, limiting profitable exit opportunities
- Fundraising has decreased by almost half from its 2021 peak
- “Dry powder” (uninvested capital) sits at near-record levels
This doesn’t mean private equity is dead—far from it. Giants like Blackstone and Apollo have diversified beyond traditional buyouts into areas like private credit and infrastructure. In fact, Apollo’s lending business has grown to nearly 10 times the size of its traditional buyout operations.
Career Implications: Where to Look
If you’re set on a career in private markets, here’s where the opportunities lie:
1. The Rise of Operational Expertise
The days of financial engineering alone driving returns are over. One VP at a mid-market PE firm expressed that private equity firms became complacent during the zero interest rate policy era. Now that ZIRP has ended, professionals need to demonstrate much deeper expertise to succeed.
Firms increasingly need professionals who can drive returns by actually improving business operations. These operational experts are now getting involved before acquisitions even happen, not just after the purchase.
If you have expertise in:
- Technology transformation
- Supply chain optimization
- Talent management
- Industry-specific operational knowledge
…your skills are in high demand, even as traditional deal-making roles face headwinds.
2. The Private Credit Boom
While traditional buyouts have slowed, private credit is absolutely booming. The same high interest rates hampering PE deals have created massive opportunities for non-bank lenders.
Blackstone’s credit business has grown to become its largest by assets under management. At Apollo, private credit now accounts for over 80% of its $751 billion in assets.
The talent gap in private credit is significant. Firms are recruiting from:
- Investment bank debt-raising or trading desks
- Debt rating agencies like Morningstar and Moody’s
- Anyone with lending knowledge who can be trained
3. Specialized Niches
Anthony Keizner at Odyssey Search Partners indicates that hiring remains strong and active in certain segments:
- Secondaries (buying and selling stakes in other private funds)
- Infrastructure investments (which have outperformed other strategies)
- Search funds (mini-PE operations focused on acquiring and improving small businesses)
Job Market Reality Check
If you’re already in private equity:
- Mid and senior-level positions face the greatest slowdown
- Many firms feel adequately staffed at current deal volumes
- Despite lower bonuses and carried interest, few professionals are rushing for the exits
- The industry still offers “the highest upside” for compensation
For those trying to break in:
- Junior hiring remains active but increasingly competitive
- AI may further reduce entry-level opportunities
- Specialized knowledge and operational skills provide an edge
The Cyclical Nature of PE
Remember that private equity is fundamentally cyclical. Previous golden ages in the 1980s and early 2000s also ended, only for new ones to emerge later. Robin Judson of Robin Judson Partners emphasizes that stagnation is the defining characteristic of the current market. She points out that the duration of this uncertain period remains unpredictable, potentially lasting anywhere from months to years.
In the meantime, the professionals who will thrive are those who can adapt to this new reality—operating businesses more efficiently, finding creative financing solutions, or identifying opportunities in specialized niches where returns still outpace public markets.
What’s your experience with the private equity industry? Are you seeing these trends play out in your job search or workplace? I’d love to hear your thoughts in the comments below.
