Private equity’s key tenets will be put to the test under Trump

The industry, which is not immune to volatility and shocks, is inherently better positioned to manage those shocks than other asset classes.

By Adam Le

If there is one takeaway from the past week, it is that the private equity industry’s ability to sit tight in the face of extreme market volatility, without needing to make rash decisions, is one of its defining attributes.

The 10-year fund model means PE-backed portfolio companies should find themselves better-positioned to ride out economic storms than public ones, which are at the whim of fluctuating share prices and whose management teams must place a greater priority on short-term earnings.

Or, to borrow a phrase used this week, PE can afford to be less “yippy.”

The long-term nature of the asset class means it benefits from a longer and more stable ownership model. As Michael Brandmeyer , global head and CIO of Goldman Sachs 's external investing group, told Private Equity International this week...

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