The private markets industry is bifurcating. General Partners (GPs) must either scale massively with broad distribution to sell multiple products, or focus on a highly differentiated, unique strategy. The middle ground—being a mid-sized, undifferentiated firm—is becoming the most difficult position to defend.

Recognizing the friction in accessing private markets, Apollo spent $1 billion from its balance sheet on wealth tech. This strategic investment aims to improve the underlying infrastructure for the entire industry, acknowledging that a better ecosystem benefits all participants, not just themselves.

Rather than competing in crowded auctions, elite private equity firms pursue a differentiated "executive new build" strategy. They partner with proven operators to build new companies from scratch to address a market need, creating proprietary deals that other firms cannot access.

Asset managers can avoid recycling old ideas by running a parallel institutional research service. The need to deliver fresh ideas to sophisticated, paying clients who challenge assumptions creates a powerful forcing function for continuous, contrarian idea generation that benefits the asset management side.

Over 80% of TA's investments are proprietary deals with founders who aren't actively selling. Their strategy focuses on convincing profitable, growing businesses to partner to accelerate growth, framing the decision as "partner with us" versus "do nothing." This requires a long-term, relationship-based sourcing model.

The 15 largest PE firms control 20% of industry AUM and have mastered capital aggregation through insurance and wealth channels. Their primary business challenge is now deploying this capital into enough quality deals, while every other firm still struggles to raise funds.

In private equity, capital is the ultimate commodity. The most effective way to differentiate is through deep, singular industry specialization. This expertise generates inbound deal flow, allows for unique value-add post-acquisition, and creates a memorable brand that resonates with sellers.

The era of generating returns through leverage and multiple expansion is over. Future success in PE will come from driving revenue growth, entering at lower multiples, and adding operational expertise, particularly in the fragmented middle market where these opportunities are more prevalent.

In today's crowded market, the key PE differentiator is no longer financial engineering but the ability to identify and cultivate relationships with target companies months or years before a sale process. This provides the necessary time for deep diligence and strategic planning.