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Welcome to the fourth and final episode in our mini-series on the alternative asset market.
Dr. Ken Wiles is a clinical professor of finance and the Executive Director of the Private Equity Center at the McCombs School of Business at the University of Texas at Austin. With decades of experience across investment banking, software, restructuring, and academic leadership, Ken brings a rare mix of practitioner and academic insights on private markets.
In this episode, we explore the evolution of private equity from the early LBO era to today’s liquidity constraints, and why Ken believes this is the best time in history to be an entrepreneur.
Episode Highlights (75 seconds) | Full Episode Linked Above
Top Takeaways
Ken explains how lower discount rates, the development of the junk bond market, and abundant inefficiencies in the 1980s created the perfect runway for PE to grow from a niche into a $22T asset class.
When the Fed raised rates at the fastest pace in its history, valuations dropped sharply. But unlike public markets, private-market declines happen in the dark. Even though fundraising slowed 40%, deal flow dropped 30%, and firms quietly extended maturities, restructured, or “extended and pretended”, without many people outside the industry noticing.
“Liquidity doesn’t matter until it does and then it’s the only thing that matters”. According to Ken, Liquidity is the biggest risk in private equity today. Pension plans, which provide two-thirds of all PE capital, aren’t receiving distributions as quickly. Without liquidity, returns fall, fundraising slows, and many funds will struggle to raise their next fund, which may lead to consolidation across PE and VC.
Ken sees the rise of new technologies leading to a new golden age in entrepreneurship. “This is the greatest period to be an entrepreneur or have an idea in history. It’s amazing. Thanks to AI, cloud infrastructure, and on-demand development talent, the cost of building a company has collapsed. Tasks that once required millions and large teams can now be executed by small groups in weeks. Barriers to entry have never been lower.”
Resources
Ken Wiles on LinkedIn
Full List of Topics Covered
The origins and evolution of private equity
The impact of interest rates four decades of PE returns
The 2022–2024 “private market crash” no one saw
Liquidity challenges and their impact on pensions and funds
How private credit prevented a maturity crisis
Manipulated unicorn valuations and extend-and-pretend dynamics
The new economics of entrepreneurship in an AI-enabled world
College students, AI, and modern career preparation
The shrinking operating costs of building software
Entrepreneurship through acquisition and the rise of search funds
Why more businesses will be built with smaller teams
The growing consolidation of trades, CPA firms, and local service businesses
The future of private equity, venture capital, and public markets interplay
Hope you enjoy the conversation. Feel free to share and let me know if anything resonates with you in the comments.
– Adam
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