This what Ted's thinking, when will private markets normalize,

tackles an issue on the minds of private equity managers and their investors alike.

Could 2025 be the year private equity fund flows return to normal?

Nope, not yet.

The supply and demand for private funds remains significantly out of balance. The mismatch started in 2019, driven by three

key factors. First, private equity managers raised funds faster and in larger sizes from 2019

to 2021 than previously.

Their investors funded aggressive GP deployment by trimming assets in public market strategies.

As allocations to private strategies exceeded long-term targets, this created a numerator

effect, effectively pulling forward future demand for private

investments. Second, the dramatic slowdown in GP exits since 2021 has trapped capital and

private investments, further straining portfolio allocations. And third, weak public market

returns in the year 2021 amplified these challenges through

the denominator effect, further increasing private market allocations in institutional portfolios.

Time has not yet fixed the problem. Recent public market strength reversed the denominator effect,

but not the pre-existing structural

challenges. LPs will need distributions to consistently exceed contributions to rebounds their

portfolios to long-term targets. The Path Forward. Today's fundraising reality is stark.

While managers hope allocators will return before their current funds

are depleted, most are adjusting expectations. Maintaining a fund size in a successor vehicle

is considered a big win. Flat is the new up. Though 2025 may bring more favorable exit conditions,

GP expectations require tempering.

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