In a record-breaking year, private equity investors made it plain that it’s not just about buyout anymore.

By Hugh MacArthur, Rebecca Burack, Christophe De Vusser, and Kiki Yang 

By just about any measure, private equity set a remarkable new standard for itself in 2021.  

Buyout deal value and exits shot to stunning new records. General partners (GPs) had the second- best fund-raising year in the industry’s history, capping a five-year run that has netted $1.8 trillion in new buyout capital (see Figure 1). Funds boosted distributions to limited partners (LPs) and continued to deliver returns outpacing any other asset class. All in all—and despite the continued economic uncertainty brought on by the Covid-19 pandemic—private equity put a bold exclamation point on what has turned out to be a decade of outstanding performance. 

With the exception of three months in early 2020 when dealmaking virtually ground to a halt, the pandemic itself has done little to slow the industry’s momentum (see Figure 2). If anything, Covid sped things up. At the fund level, traveling less has made teams more efficient. (Almost half of LPs in a recent Coller Capital survey say they’ve made recent fund commitments with GPs they’ve never met in person.) And at a macro level, public and private investors have benefited mightily from the trillions in monetary stimulus that central banks have pumped into the global economy since March 2020 to combat the effects of Covid-related shutdowns.