It is uncontroversial to suggest that we are living in the golden age of private equity. Private equity refers to companies that pool investor’s funds to invest in undervalued companies and assets to majorly get long-term value. The ultimate aim is to provide a high return to investors on those assets, assigning expert management teams to manage the companies and assets outside of the glare of public markets.The investment targets can be public or private, but if public, will be taken private by the private equity company overseeing the investment. Private companies like BlackRock, KKR, and Apollo are now as well known as their blue chip investing banking counterparts, and in some areas, find themselves in direct competition with each other.

Although DealRoom supports transaction management of both in tandem, the focus of this article is the private equity industry - specifically, the 11 biggest players in the industry.

Here are the 15 largest private equity firms listed in order based on their current AUM (Assets Under Management):

1. BlackRock - AUM: $8.2 trillion

Despite facing challenges in 2022, BlackRock, the unrivaled leader of global private equity, experienced a significant recovery in 2023. Following a year where it saw a loss of around 25% in its AUM due to investor criticism of its impact investment strategy, BlackRock demonstrated resilience and adaptability.

Remarkably, entering 2024, the American private equity giant now commands an impressive $8.2 trillion in assets under management (AUM), reaffirming its dominance in the industry of asset management and financial services. This remarkable rebound underscores BlackRock's track record of success and its ability to navigate turbulent market conditions across North America, Asia, and beyond.

Anticipate further developments from BlackRock in 2024, including potential revisions to its ESG strategy, as the company remains committed to addressing investor concerns and sustaining its position as a leading force in private equity and investment management. With a focus on alternative investments, growth equity, partnerships, and strategic mergers, BlackRock continues to attract institutional investors globally while actively supporting startups and technology companies. Its inception in London and expansion into business services have further solidified its net worth and standing in the financial sector.

2. Blackstone - AUM: $1.1 trillion

In 2022, Blackstone encountered challenges, facing investor withdrawals that impacted its year-end AUM. These shifts prompted a reassessment of strategies, particularly regarding a fund aimed at HNWIs, as they diverted from real estate and credit funds.

By 2024, Blackstone has navigated these hurdles, maintaining resilience amidst market shifts. With its AUM now at $1.1 trillion, Blackstone remains a significant player in financial services, focusing on alternative investments and partnerships.

Expect Blackstone to adapt further, addressing evolving market demands while delivering value for clients.

3. Apollo Global Management - AUM: $600 billion

Apollo Global Management's latest strategy, centered around expanding credit offerings to capitalize on rising interest rates, geopolitical shifts, and increasing liquidity challenges, has bolstered its standing in the financial landscape.

Moving into 2024, Apollo Global Management maintains a robust AUM of $600 billion, reflecting its continued success and adaptability in navigating dynamic market conditions. Anticipate Apollo to remain proactive in seizing opportunities and leveraging its expertise in credit investments to drive growth and value for its clients.

4. KKR - AUM: $550 billion

KKR continued its upward trajectory in 2023, capitalizing on market dynamics and positioning itself as a prominent player in the private equity landscape. Benefiting from BlackRock's short-term decline, KKR saw significant growth, raising a substantial $126 billion in funds over a 12-month period.

This impressive fundraising effort propelled KKR's AUM to $550 billion, solidifying its position as a leading global private equity firm. With its strategic initiatives and strong investor confidence, KKR remains on track to further ascend in the ranks of the industry.

As KKR continues to seize opportunities and maintain its momentum, expect the firm to reinforce its standing among the top players in private equity, driving value for investors and stakeholders alike.

5. The Carlyle Group - AUM: $420 billion

In a noteworthy shift, The Carlyle Group saw its private debt business surpass its private equity division for the first time in 35 years in 2022. This strategic evolution underscores the firm's adaptability and diversified investment approach.

Furthermore, The Carlyle Group made strides in sustainable investing by launching a clean energy developer, signaling its commitment to renewable energy initiatives. While specific investment figures were not disclosed, this venture aligns with the firm's forward-looking strategy and commitment to environmental responsibility.

As The Carlyle Group enters 2024 with an AUM of $420 billion, it continues to navigate evolving market trends and pursue innovative opportunities. Expect the firm to remain at the forefront of the industry, leveraging its diverse portfolio and strategic initiatives to drive growth and create value for stakeholders.

6. CVC Capital Partners - AUM: $180 billion

As the largest European private equity company by AUM, CVC Capital Partners remains a key player in the industry. In 2022, the firm had considered listing on the Paris Stock Exchange, but ultimately decided against it, citing a lack of immediate plans for such a move.

As interest rates in Europe continued to rise, CVC Capital Partners remained cautious about potential listing plans in the first half of 2023. However, as market conditions evolve, the firm's decision-making process may be subject to further assessment.

With an AUM of $180 billion, CVC Capital Partners continues to leverage its expertise and strategic positioning in the European market. Expect the firm to navigate market dynamics thoughtfully, prioritizing sustainable growth and value creation for its investors and partners.

7. TPG - AUM: $160 billion

In contrast to CVC Capital Partners, TPG proceeded with its IPO in 2022, opting for a listing on the Nasdaq index. This decision stood out given that most competitors had chosen the NYSE nearly a decade prior.

The $10 billion IPO was deemed successful, signaling investor confidence in TPG's prospects. However, the true measure of success lies in how the market responds to the firm's newly-announced focus on debt and infrastructure.

With an AUM of $160 billion, TPG continues to navigate shifting market dynamics with agility and foresight. Expect the firm to uphold its commitment to innovation and value creation as it explores new avenues for growth and investment.

8. Thoma Bravo - AUM: $130 billion

Specializing in technology investments, Thoma Bravo remains vigilant for potential opportunities amid evolving market conditions. With gathering clouds over the tech industry, the firm sees potential to acquire underpriced assets in 2023.

In a notable move in 2022, Thoma Bravo attempted to outbid Elon Musk's bid for Twitter, a decision that may have repercussions for both parties. As the year drew to a close, the firm announced a substantial $32.4 billion fund earmarked for new acquisitions in the technology sector.

With an AUM of $130 billion, Thoma Bravo continues to demonstrate its strategic foresight and agility in pursuing value-driven investments. Expect the firm to remain proactive in identifying and capitalizing on opportunities for growth and expansion.

9. EQT - AUM: $120 billion

EQT continues its rapid ascent as one of the most prominent private equity firms globally in the year 2024. With an AUM of $120 billion, the firm maintains its momentum following a remarkable fundraising year in 2022.

Based in Sweden, EQT raised $57 billion, solidifying its position as a top fundraiser globally. Notably, the firm's focus on Japanese technology deals underscores its strategic approach to expanding its portfolio and seizing growth opportunities. As EQT remains on the radar of industry watchers, expect continued innovation and value creation from this dynamic player in the private equity landscape.

10. Insight Partners - AUM: $110 billion

Despite market dynamics, New York-based Insight Partners maintains a unique stance, advising investors to steer clear of debt in 2023. This strategic move reflects the firm's commitment to navigating crowded fields and focusing on its Europe-focused private equity strategy.

As Europe grapples with economic challenges, Insight Partners remains steadfast in its approach, prioritizing stability and value creation for its LPs. With an AUM of $110 billion, the firm continues to uphold its track record of success and resilience in the ever-evolving private equity landscape.

11. Warburg Pincus - AUM: $100 billion

With an impressive AUM of $100 billion, Warburg Pincus continues to be a formidable force in the private equity arena. Renowned for its focus on growth investments and strategic partnerships, the firm has established itself as a trusted partner for companies seeking to scale and expand their operations. 

By leveraging its extensive industry expertise and global network, Warburg Pincus actively identifies and pursues investment opportunities across a diverse range of sectors, from technology and healthcare to consumer and industrial. With a commitment to driving value creation and fostering long-term success, Warburg Pincus remains at the forefront of the private equity landscape, poised to capitalize on emerging trends and opportunities in the ever-evolving market.

12. Advent International - AUM: $95 billion

Advent International stands out as a leading private equity firm with an AUM of $95 billion. Specializing in buyouts and growth investments, the firm has a proven track record of partnering with management teams to unlock value and drive sustainable growth. 

With a global presence and deep sector expertise, Advent International actively seeks out investment opportunities in industries undergoing transformation, such as technology, healthcare, and financial services. By employing a collaborative and disciplined approach to investing, Advent International continues to deliver superior returns for its investors while making a positive impact on the companies it supports and the communities in which they operate.

13. Bain Capital - AUM: $90 billion

Bain Capital remains a cornerstone of the private equity industry, boasting an AUM of $90 billion. Known for its diversified investment approach and strategic acquisitions, the firm has a rich history of successfully partnering with companies to accelerate growth and enhance operational performance. Leveraging its extensive global network and deep industry knowledge, Bain Capital identifies investment opportunities across a wide range of sectors, including consumer, retail, healthcare, and technology. 

With a focus on generating long-term value and fostering innovation, Bain Capital continues to be a trusted partner for companies seeking strategic guidance and support in navigating today's dynamic business landscape.

14. Vista Equity Partners - AUM: $85 billion

Vista Equity Partners stands at the forefront of the private equity sector with an AUM of $85 billion. Specializing in software and technology investments, the firm has established itself as a leader in driving value creation and innovation within the tech industry. With a proven track record of success, Vista Equity Partners actively partners with high-growth software companies to accelerate their growth trajectories and maximize their potential. 

By providing strategic guidance, operational support, and access to a global network of resources, Vista Equity Partners empowers its portfolio companies to thrive in today's competitive market landscape.

15. Silver Lake Partners - AUM: $80 billion

Silver Lake Partners remains a prominent player in the private equity landscape, boasting an AUM of $80 billion. Focused on technology investments and strategic partnerships, the firm has earned a reputation for its ability to identify and capitalize on transformative opportunities within the tech sector. With a keen eye for innovation and a deep understanding of market dynamics, Silver Lake Partners actively seeks out investment opportunities that offer significant growth potential and value creation. 

By leveraging its extensive industry expertise and network of strategic relationships, Silver Lake Partners continues to drive success and deliver exceptional returns for its investors and portfolio companies alike.

How does Private Equity Work?

The Process

The process for private equity funds typically works along the following lines:

1. The Capital Raise: The period in which the private equity team seeks to convince investors to invest their capital in their fund or (sometimes) their company.

2. Deal Sourcing: The period in which the private equity company looks for suitable opportunities that fit its investment thesis.

3. Post-acquisition Operational Improvement: The period in which the acquired company is restructured by the private equity team to generate more value.

4. Liquidation:The period in which the acquired company is either sold or brought to an IPO enables the private equity company and its investors to liquidate their investments.The end goal of this process is to generate a higher multiple of earnings (i.e. value addition) than the company or asset was acquired for.

Characteristics of Firms that Private Equity Invests In

If there is a single theme that unifies all private equity investments, it is that the companies or assets being invested in are undervalued in some way.

Either because their current owners have not spotted the potential of the business, have mismanaged it, or have not been able to access the capital to bring the company to scale, the private equity company seeks to add value that will ultimately generate investor returns. Beyond this, private equity companies also pay attention to issues such as:

• Industry and market dynamics
• Cash generation potential of business
• Competitive positioning
• Technology/capital requirements (insert the link on capital investments)
• Potential to disrupt an industry

What are the most common PE strategies?

A previous DealRoom article discussed the six most common strategies used in private equity. These are:

1. Venture capital
2. Growth capital
3. Real estate
4. Mezzanine financing
5. Leveraged buyout (LBO)
6. Fund of Funds (FoF)

How does Private Equity Differ from Venture Capital?

For details on this question, check our deep dive into the differences between private equity and venture capital (or check the list of top venture capital firms). Notwithstanding, the main differences can be summarized as follows:

Looking at private equity companies and the investment strategies they outline for markets as a year begins is often a good way of telling which way the wind will be blowing.

DealRoom M&A Optimization Platform has been a catalyst in many large deals for private equity companies over the years and has been privileged to gain some valuable insights into private equity thinking in the process. Talk to us today about how we can drive your next private equity engagement.