Why Invest in PE?

Most families who have accumulated significant wealth did so by building a successful business of some kind and selling it for lots of money. Thus, the first reason families should consider investing in PE is that it is culturally the most familiar kind of investment a family can buy. The people who run PE-backed firms are the wealthy families of the future (assuming they are successful)—in other words, people like you.

Beyond that, PE is a tax-advantaged investment. PE returns are taxed at long-term capital gains rates, and those taxes are deferred long into the future, allowing the investment to compound tax-free for a decade or more.

Finally, the potential returns on PE are much higher than the returns available on public equities, thus qualifying PE for representation in the “aspirational” portion of a family investment portfolio.³