Private Equity Experience

Is 40% of Private Equity About to Disappear?

• Emily Sander • Season 1 • Episode 30

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0:00 | 38:57

📉 Is the Private Equity model fundamentally broken, or is it just a pause?

In this episode of the Private Equity Experience, hosts Ed Barton, Rory Liebhart, and Emily Sander dive deep into the "structural reset" currently hitting the industry. Based on recent data from Cascadia Capital, the team debates whether the recent slowdown is a temporary cyclical pause or a permanent shift in how private equity operates.

Inside this episode:

  • The Family Business: Ed shares a personal update on hiring a "nepo baby" to navigate a challenging tax season.
  • Structural Reset vs. Cyclical Pause: Why 30-40% of existing PE funds might not be operating in five years.
  • The Rise of Secondaries: Understanding why continuation vehicles now make up 30% of PE exits.
  • The Valuation Gap: Dealing with the "bid-ask spread" and the reality of 13x vs. 9x EBITDA multiples.
  • Transparency is King: Why Limited Partners (LPs) are moving from a "just trust us" mentality to demanding hard numbers and predictable returns.

Key Takeaways:
Whether you are an investor, a business owner, or a finance professional, understanding these new market forces—from the $1.4 trillion in unrealized value to the increasing competition from family offices—is crucial for navigating the 2026 landscape.

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Who Are We?

Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).

Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.

🔗Connect with Ed

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...

Introduction to the Private Equity Experience Podcast

Welcome to the Private Equity Experience Podcast. Your backstage pass to the strategies, stories, and secrets that drive value in the PE universe. No filters, no fluff, just straight talk and expert insights to help you navigate the private equity world with confidence. And now your hosts, ed Barton, Rory Leaphart, and Emily Sander.

Hosts' Personal Updates and Banter

emily-sander_1_01-27-2026_140514

And roll. Sexy Pex. How are my pec boys?

rory-liebhart_1_01-27-2026_140512

I'm good

emily-sander_1_01-27-2026_140514

Just ducky Ed says,

rory-liebhart_1_01-27-2026_140512

to see you both again. Here we are,

emily-sander_1_01-27-2026_140514

yes, yes, yes. going on in your worlds besides the Seahawks? Making it to the Super Bowl Representing.

rory-liebhart_1_01-27-2026_140512

It's 2014 again. Yes. Um, yeah, I'd say that like the years off to a good, busy start, you know? Um. All around career, uh, personal, all that stuff. Yeah. So it's no real transition, just in it. Good.

eddie-b--has-them-_1_01-27-2026_140511

It is the beginning of tax season and I had the tax preparer that's, that assists me with 200. Some returns quit.

rory-liebhart_1_01-27-2026_140512

Oh,

emily-sander_1_01-27-2026_140514

no.

eddie-b--has-them-_1_01-27-2026_140511

I, I hired, I hired a new tax preparer by the name of Julia.

emily-sander_1_01-27-2026_140514

Julia

eddie-b--has-them-_1_01-27-2026_140511

Julia Barton.

emily-sander_1_01-27-2026_140514

to

eddie-b--has-them-_1_01-27-2026_140511

Yeah. She's coming to work. I actually,

emily-sander_1_01-27-2026_140514

boy.

eddie-b--has-them-_1_01-27-2026_140511

actually, well, you were well, well, we were waiting Rory. I was on getting her set up with health insurance, so here we go.

rory-liebhart_1_01-27-2026_140512

gosh.

eddie-b--has-them-_1_01-27-2026_140511

Getting her in the family business.

emily-sander_1_01-27-2026_140514

Family of business.

rory-liebhart_1_01-27-2026_140512

the destiny. That's the destiny. I.

emily-sander_1_01-27-2026_140514

Do you think she will. I don't know if she'll, I don't know if she listens to your podcast here, but do you think she'll thrive? Or is it gonna be like a, is the real world. You gotta like, you gotta it together

eddie-b--has-them-_1_01-27-2026_140511

think there'll be a little bit of both. And she's a, she's a bit of a nepo baby now. So she's gonna get, she's gonna get, uh, she. You know, if I gotta, if I gotta pay one way or the other, I might as well do it and get some production out of her. So, yeah,

emily-sander_1_01-27-2026_140514

kid

eddie-b--has-them-_1_01-27-2026_140511

she is, she really is. She's a very, very, very sharp kid. And you know, she, she's. Back injury basically knocked her out of her last job. So she's, you know, this puts her, this puts her in a position to be able to heal up and, and stay busy. And if she takes to it, there's a good career in, in accounting and finance and people aren't going into it and she can do it. It's not, it's not that she couldn't, it's whether she wants to,

emily-sander_1_01-27-2026_140514

doing like tax returns?

eddie-b--has-them-_1_01-27-2026_140511

she'll be doing, she'll be prepping. Doing most of the data entry in preparation for my tax returns, and then I'll finalize'em. So I, it's gonna add about 10 hours a week to my, already got a full schedule during tax season to cover off what my, uh, prior preparer was doing. But Julia's gonna, she'll learn it and I think within two years she'd be, if this is something she likes to do, she'd be on her own. She'd be, she'd be off and running.

rory-liebhart_1_01-27-2026_140512

Wow,

emily-sander_1_01-27-2026_140514

for her. Awesome.

rory-liebhart_1_01-27-2026_140512

what a secured, circuitous route to, uh, falling in pops his

eddie-b--has-them-_1_01-27-2026_140511

Yep.

rory-liebhart_1_01-27-2026_140512

In some ways

eddie-b--has-them-_1_01-27-2026_140511

Yep. See about that.

Lightning Round Questions

emily-sander_1_01-27-2026_140514

Very cool. Couple, couple lightning round

rory-liebhart_1_01-27-2026_140512

we

emily-sander_1_01-27-2026_140514

questions to get us warmed up. Uh, what is something you wish came with an early exit button?

rory-liebhart_1_01-27-2026_140512

Hmm. Early exit button. Gosh.

emily-sander_1_01-27-2026_140514

Eject. Get me outta here.

rory-liebhart_1_01-27-2026_140512

yeah, sometimes family gatherings, I would say particularly around the holidays at times. And, uh, apologies to any of my family that's watching this, but you know what I'm talking about.

emily-sander_1_01-27-2026_140514

You know who I'm talking about. got the crazy uncle, the crazy family member.

rory-liebhart_1_01-27-2026_140512

for me personally, social situations, I'm an introverted person, so sometimes, uh, you know, I, I've had enough pretty quickly of, um, the

emily-sander_1_01-27-2026_140514

You've been people out. This is a thing. I, I have this thing too. Yeah. It's like I love people. I don't, it's not like I hate people. It's just like also need time to recharge and be away from humans.

rory-liebhart_1_01-27-2026_140512

Exactly,

emily-sander_1_01-27-2026_140514

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

Oh, and mine's. Mine's traffic and crowds.

rory-liebhart_1_01-27-2026_140512

oh, good

eddie-b--has-them-_1_01-27-2026_140511

So because I'm trying to get from here to somewhere and all these people are. Just not making that possible. So if I could hit new check button. Yeah. Get out of my way, that would be, that would be great.

rory-liebhart_1_01-27-2026_140512

Yeah,

emily-sander_1_01-27-2026_140514

Yeah.

rory-liebhart_1_01-27-2026_140512

How about

emily-sander_1_01-27-2026_140514

Okay. I would say I was at an airport recently. I was like airports with people who.

rory-liebhart_1_01-27-2026_140512

Hmm.

emily-sander_1_01-27-2026_140514

Don't know how to walk in a crowd.

rory-liebhart_1_01-27-2026_140512

gosh.

emily-sander_1_01-27-2026_140514

Like when you're in an airport and you have to like get something from your bag, totally fine. Happens to everyone. Step aside, don't just stop in the middle. I'm like, Hmm.

rory-liebhart_1_01-27-2026_140512

yeah, yeah.

emily-sander_1_01-27-2026_140514

Exit, exit, exit. Just get me like on the plane, get me through security through the people who don't know how to walk onto the plane.

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

okay. Next up we got, a decision you made during your personal confidence bubble when you were feeling good?

eddie-b--has-them-_1_01-27-2026_140511

What's a decision I made in my personal confidence bubble?

emily-sander_1_01-27-2026_140514

Like when you were feeling like really good when you were like, okay, things are bullish, everything's on the rise. I would say I started my business definitely when I was like. just feels right. I'm doing, I'm setting myself up to do this. Like, I felt really good about that. There was definitely some like ho, ho, ho rollercoaster moments in there, but uh, ended up being okay.

rory-liebhart_1_01-27-2026_140512

I would say for me it's more per on the personal level, sort of just, um, approaching really tough objective, you know, endurance challenges and things like that. I've sort of gravitated towards those things. So when I'm feeling really good and, and bullish and confident, I'll, I'll go ahead and like, sign up for, you know, an ultra marathon or something like that and just, you know, gotta be feeling like I'm in a certain head space to, to, to. Bite that off, but uh, but it feels great to do it, so, yeah.

eddie-b--has-them-_1_01-27-2026_140511

I, I don't really have, nothing's coming to mind. I think, I think my natural finance everything.

emily-sander_1_01-27-2026_140514

had a personal confidence?

eddie-b--has-them-_1_01-27-2026_140511

No.

rory-liebhart_1_01-27-2026_140512

What about running for office man,

eddie-b--has-them-_1_01-27-2026_140511

Well,

rory-liebhart_1_01-27-2026_140512

that?

eddie-b--has-them-_1_01-27-2026_140511

yeah. I mean, I, I guess maybe the, the flip side to it is maybe I don't have a personal confidence bubble because I just live in one all the time and I don't fear a lot. So

emily-sander_1_01-27-2026_140514

Oh gosh.

rory-liebhart_1_01-27-2026_140512

the

eddie-b--has-them-_1_01-27-2026_140511

it just becomes like a, okay, well let's, let's go do that. That's fine.

rory-liebhart_1_01-27-2026_140512

I like that. Good

emily-sander_1_01-27-2026_140514

You came out. You came out in a personal confidence bubble and you've never left.

rory-liebhart_1_01-27-2026_140512

That's it. Yep.

Main Topic: Structural Reset in Private Equity

emily-sander_1_01-27-2026_140514

Alright. Alright. Our topic for today, private equity is undergoing a structural reset. than a cyclical pause question mark. This is the topic du jour from Cascadia Capital's quarterly newsletter, and Rory has a connection there. So it was all about this and all over this, knew all about it, but they're making the argument that private equity is going through a structural reset and then there's counterpoints to that. But that's the premise. Yeah.

rory-liebhart_1_01-27-2026_140512

I'd say so. I mean, and it's um, I think people like to report on things, you know, quarterly, but kind of reflecting on a prior year. I don't know, for whatever reason we think about things in terms of fiscal year and being able to compare trends to prior years and stuff like that. So this happened to be the first, um. kind of data driven report out on 2025 trends and what to look for in 26 from Cascaded Capital, who's a really highly respected sort of boutique investment bank here in Seattle area. And they're, they've grown of course, to be both, you know, national and global. But, uh, I, I thought there was some really good information here to kick around and debate and talk about. But yeah, I think that's one of the main things is to say, Things are changing potentially permanently for the private equity industry. So

emily-sander_1_01-27-2026_140514

And we've kind of touched on, there's the kind of 2000, uh, 2021. Kind of kickoff point, and then it's like starting to land, so something's gonna happen.

eddie-b--has-them-_1_01-27-2026_140511

Yep. And, and we've hit on that

rory-liebhart_1_01-27-2026_140512

have,

eddie-b--has-them-_1_01-27-2026_140511

routinely throughout this, that like there was a lot of, a lot of money chasing a lot of deals and that it was gonna be difficult for those deals to really pan out.

rory-liebhart_1_01-27-2026_140512

yep.

eddie-b--has-them-_1_01-27-2026_140511

You know, private equity tends to, tends to do really well and they're really smart. But when you have to do a deal in order to to get something done, and whether that's on a buy side or the sell side, you tend to make decisions that you might regret later.

rory-liebhart_1_01-27-2026_140512

yeah, yeah,

emily-sander_1_01-27-2026_140514

And, and I, the article also noted a kind of a moving from a just trust us to like show me the numbers mentality.

Challenges and Innovations in Private Equity

rory-liebhart_1_01-27-2026_140512

yeah. Well, there and there's, and we even talked about it. One of our more recent podcasts, there's so many other sources of private capital now beyond private equity funds that, you know, there's now competition where there wasn't previously from like family offices and other, other, um, pools of, of capital and, and in some cases just straight up investments from LPs direct into companies. So, you know, private equity is, is kind of being, um, in a way, you know, it's having to respond to new market forces, call it, and, you know, um. You know, as Ed said, and we talked about earlier as well, like just the cycle we've been in for the last five to six years has lent itself to new innovation, but also new constraints. And so there's, yes, there's a ton of capital on the sidelines, but there's also a lot that's tied up in businesses that in order to go raise more funds, you need to liquidate your current funds. And how are they doing that? There's a variety of different ways and, you know, um, things that are discussed, which I think is kind of a. Relatively new thing, or like continuation vehicles. So think about it like this. What is a continuation of vehicle? It's like if you come up on the end of a term of something, you can, you can basically have somebody take things, take that over from you, um, IE buy it, or roll it into a new vehicle that is capitalized by a separate set of investors so that you can get your liquidity to go do more of what you're intending to do. So it's almost like there's, I'll just put it this way, just really summarize it. There's now much bigger market for uh, interest in private equity funds than there ever has been before. think about it, it's like a new market's been created for like secondaries. You're trading, you're trading your positions in a private, in, in a company a private equity fund is selling it even possibly to another private equity fund.

eddie-b--has-them-_1_01-27-2026_140511

Well, I was, I was gonna,

rory-liebhart_1_01-27-2026_140512

the Rosie

eddie-b--has-them-_1_01-27-2026_140511

I was gonna say, going back to the last time that there were some capital constraints or, you know, the market was clogged up and we were working with. Um, very large private equity firm out of Dallas. Um, they had funds that they, or they had portfolio companies they sold from fund to fund.

rory-liebhart_1_01-27-2026_140512

yeah,

eddie-b--has-them-_1_01-27-2026_140511

sell from fund four to fund six.

rory-liebhart_1_01-27-2026_140512

yeah.

eddie-b--has-them-_1_01-27-2026_140511

'cause they had to get liquidity in the fund. Four, the markets were jammed up'cause this was oh 8, 0 9. And so they're like, oh, well, we'll have fund six by fund four assets, and then that frees up fund four money and moves it to fund six. And so I'm, I'm cur gonna be curious to see, and again, I think the LPs are, are, are very, very, very intelligent, sophisticated investors in their own right. But, you know, the, the private equity folks are gonna get jammed to the point where they've got, you know, they're gonna need to get waivers on on. On fund life, they're going to, you know, the, the limited partners are gonna be irritated that the returns aren't there because it's one or the other. You're either gonna get liquid or you're gonna sell in a forced situation where the, the return is, the regular markets have gone up, you know, they're averaging double digit returns the last few years.

rory-liebhart_1_01-27-2026_140512

Yes.

eddie-b--has-them-_1_01-27-2026_140511

This turns into private equity. Some of these private equity transactions from 21 may end up with single digit, mid single digit returns, if not negative.

rory-liebhart_1_01-27-2026_140512

Exactly because valuation multiples at the time, I was just looking at some of the data that was provided in, in that newsletter, and I mean, five years ago, kind of like the value over EBITDA ratio is like 13 x. So like companies were trading at like 13 times. Um, EBITDA on average, right? Or actually it was the median. As a matter of fact, you know, we're just now starting to see that go up and it's only at about nine x. So there's that, what what's called a bid ask spread

eddie-b--has-them-_1_01-27-2026_140511

Yeah.

rory-liebhart_1_01-27-2026_140512

is pretty wide still, but to Ed's point, you know, you really are gonna make or break your investment on the buy for the most part. It's hard to operate your way out of something like that kind of a bid ask spread over time. But I think that's what folks have been waiting for is to see if they can narrow that bid, ask spread. But now you're coming up on that sort of five, seven year window. forced to transact, you're forced to do something. Whereas before it was like you're, you have all this dry powder, you're forced to go make buy deals by companies, and you're paying up for that. We'll deal with that later. We'll expect that the market will continue to, to, to progress. And

emily-sander_1_01-27-2026_140514

Yeah.

rory-liebhart_1_01-27-2026_140512

five years later, you're like. You know, I need to get out from under this or figure out a way to liquidate this. And that's why we, again, we talk about these secondaries as they're called in terms of selling positions, but maybe the company itself is not sold. Right. So, yeah.

emily-sander_1_01-27-2026_140514

So you run into a time crunch. Crunch?

rory-liebhart_1_01-27-2026_140512

Yeah. And then,

emily-sander_1_01-27-2026_140514

Yeah. Okay.

rory-liebhart_1_01-27-2026_140512

to deal with. As we've always talked about the financing aspect. So you, you're coming up maturity walls on debt and so you have to deal with that as well. All the more reasons, maybe get out of a position if you can. So many, so many things going on right now, but um, you know, where there's a will, there's a way. so, uh, know, I think things will be, things will be, um, ever evolving in that way.

emily-sander_1_01-27-2026_140514

So the article notes, 30% of PE exits are now continuation vehicles.

rory-liebhart_1_01-27-2026_140512

Crazy.

emily-sander_1_01-27-2026_140514

I, I'm just curious, like who is this good for with the secondary markets expanding, who is that favorable toward,

rory-liebhart_1_01-27-2026_140512

Presumably investors. Yeah. As you

eddie-b--has-them-_1_01-27-2026_140511

It had fire.

rory-liebhart_1_01-27-2026_140512

the buyer. Yep.

emily-sander_1_01-27-2026_140514

but just other PE firms, like, is that

rory-liebhart_1_01-27-2026_140512

a way? Um, well, it could be other PE firms, it could be family offices, it could be, know, just, uh, what's called institutional investors as l LPs, I mean just pools of capital. And I mean, there's still. I mean, I was, another stat that was I found really interesting is there's like$1.4 trillion of remaining value on the table. meaning of all of the assets under management, you're talking about the remaining value of these businesses that have been unrealized is sitting there. That's with a t

emily-sander_1_01-27-2026_140514

Yes.

Future of Private Equity Firms

rory-liebhart_1_01-27-2026_140512

much there. Make no mistake, there's a ton of capital out there, but it's like how you pass that. Pass these assets around to get people out of their positions and create liquidity in other ways. That's what's really

emily-sander_1_01-27-2026_140514

Well, one of the Stark stats the article mentioned is a estimate of 30 to 40% of existing PE funds may no longer be operating within five years. That seems pretty structural to me.

rory-liebhart_1_01-27-2026_140512

does. I found that to be a particularly, uh, you know. Interesting maybe inflammatory statement to make that, I mean, that's what does that, let's talk about that for a second. What does that imply? Does that imply consolidation? Does that imply, know, these firms that have been unsuccessful with their investments, they're basically gonna get all their capital redeemed and never raise more to go do it again. Like, does that mean? And that's a bold statement to make, but that's a. You know, I'm trying to think through the machinations of how we would, how we would see that kind of a fall off, you know?

eddie-b--has-them-_1_01-27-2026_140511

Yeah, I, I think. It, it is gonna be maybe a survival of the fittest situation where those, those, when you think about the LP universe, they talk and, and a lot of that, I don't wanna say it's concentrated, but it really is your pension funds, your, your college endowments. You, you and your, you know, state pension funds, private pension funds, college endowments, insurance companies.

rory-liebhart_1_01-27-2026_140512

Yep.

eddie-b--has-them-_1_01-27-2026_140511

That's, that's your biggest contributors. It's a relatively small universe and everybody talks. And the chief investment officers there all talk and I think what's gonna end up happening is those private equity firms that are showing themselves capable of navigating through this well are gonna end up getting more of the capital the next time around. And you know, it, it becomes one of those, I think the timeline may be short. But I think it's gonna be consolidation. I don't think folks are going to, you may see some, some divestment away from the asset class, but I think it's gonna generally stay there. Folks have, you know, looked at, looked at this asset class, assuming there's alpha there relative to the risk premium, and go, okay, look, we're gonna, we're gonna stay in private equity, but we don't want, you know, we're gonna stick with only the best. And,

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

you know, we've kind of, it was easier to make money in the past. These guys haven't kind of shown the ability to do that going forward. And, you know, they'll, they'll rally around some of the, the folks who have proven

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

is that like when you own stocks and the market takes a downturn and you kind of see which ones are most buoyant, where it's like, okay, these ones are resilient or higher performing

eddie-b--has-them-_1_01-27-2026_140511

May.

rory-liebhart_1_01-27-2026_140512

ways, yeah.

eddie-b--has-them-_1_01-27-2026_140511

Yeah, may maybe some, I think it's more. You know, when you see a, when you see a a, not the stock as much as the money manager that recommended those stocks, and you go, Hey, this one's consistently kinda hit,

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

you know, as, as I've gone through good markets and bad markets and this one over here has not been able to kind of have that same consistency when you're looking at. You know, an investment time horizon that's relatively lengthy as in infinite for things like college endowments, pension funds,

rory-liebhart_1_01-27-2026_140512

Mm-hmm.

LPs Seeking Stability Over Liquidity

eddie-b--has-them-_1_01-27-2026_140511

they're, they're looking for long, long, long term consistency is almost. More important than absolute return.'cause they've gotta be able to plan to pay out benefits and, and program for, for the colleges and not-for-profits. And so that becomes a, you know, can these guys in good times and bad get me consistent, solid, you know, market returns with alpha attached to it. And that's gonna, that's gonna really drive the train, I think.

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

some of those LPs saying we want the option to get out sooner.

rory-liebhart_1_01-27-2026_140512

I, I'd say they're more looking for stability. I think liquidity is maybe even secondary. And the reason for that is because, again, in their private equity strategy, um, they're specifically allocating capital to more of a, a long term

eddie-b--has-them-_1_01-27-2026_140511

Yeah.

rory-liebhart_1_01-27-2026_140512

They, they, they invest in public equities, like, just like most of us in, you know, most of what they do, but they have a private equity play. I think it's about stability and consistency. And I was thinking as you were talking about like the analogy. I look at it almost like give me that asset manager that can give me 7% returns on a diversified equities portfolio over time, as opposed to somebody that every 10 years has a, know, um, a short strategy where they do 20%, but, but it's totally volatile. Like they don't want the volatility, I think is what it comes down to.

emily-sander_1_01-27-2026_140514

Yeah.

rory-liebhart_1_01-27-2026_140512

so, you know. The, you know, the bigger, the bigger the fun, the bigger the, you know, pool of talent, the bigger the, you know, deal pipeline, you know, I guess in this case, bigger is better in that, in that framework. So if you're just like a, gonna be a tough row to hoe if you're just. Kind of starting out as a private equity fund and just saying, Hey, I'm hanging out my shingle. I'm gonna go raise$5 billion. You know, maybe, maybe in, maybe five years ago you could have done that a lot easier, perhaps.

emily-sander_1_01-27-2026_140514

Are the, are the LPs the ones wanting more transparency though? Like, Hey, we wanna take a closer look, even if it's just to kind of figure out our, the, the predictability of this so we can kind of put this on our forecast or whatnot.

rory-liebhart_1_01-27-2026_140512

yeah, definitely. Definitely. And they can get it. I mean, and that's, that's, that's part of the shift, right? Like the supply demand is like setting the, the parameters? It's more the, you know, the capital rather than the, the PE funds. So, um, yeah, yeah. It's more moving more towards like a, you know, much more like a public. You know, SEC kind of oversight type of thing where, you know, transparency is gonna be more at a premium. and those that can show it more are probably gonna garner more, uh, more funds raised because, you know, you, you want to, the more you see into what you're buying into, the better, and you can, and as a chief investment officer, you can manage your risk better. Certainly.

emily-sander_1_01-27-2026_140514

Like what would you wanna see specifically to manage your risk better? Like, hey, I'm an lp. I'm giving you and millions of dollars.

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

I wanna know this.

rory-liebhart_1_01-27-2026_140512

like specifically what the strategy is, as opposed to saying, Hey, here's a billion dollars, you know? Go figure it out. You know, it's more like, well, what is your investment mandate like? Are you, you know, in certain spaces within the, you know, industry sector, you know, geographically are you, in certain parts of the world. You know, it's, it's really about like, what does that. Investment criteria look like, you know, um, so you, you know, maybe, maybe there's a place for total specificity, but maybe there's more of a place for, you know, a broad strategy. It just depends, you know, but it's more like, the more information you have at your disposal that to determine how you can allocate your capital, the better. And, you know, they can ask for it, and they're probably in more position to get it.

emily-sander_1_01-27-2026_140514

Ed, you look pensive.

eddie-b--has-them-_1_01-27-2026_140511

I am, but I'm, I'm remaining pensive.

emily-sander_1_01-27-2026_140514

Okay. Do you think that You can ask all those questions, but does it really change anything? Like is it just for their own comfort? They ask the questions so they kind of have a better sense, or they think they have a better sense, or would they actually change their allocation?

eddie-b--has-them-_1_01-27-2026_140511

They will change their allocation.

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

They, they absolutely, they absolutely will. And it's, and again, the, I don't want to discount the kind of the. The crowd effect of,

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

know, everybody starts making a move, everybody else will start making a move or the lemming effect or whatever you wanna call it. So, you know, I folks will change the allocation and once the allocation starts shifting, everybody will start shifting their allocations.'cause they're gonna, you know, you'll get a, you get your classic like 20% contrarians that'll do the act exact opposite of what everybody else is doing. And then the other 80% are gonna go that way because. You can't get in trouble by doing what 80% of the people are doing,

rory-liebhart_1_01-27-2026_140512

I was listening to a podcast last week on, a Bloomberg podcast called Odd Lots, which I recommend to the audience out there. They're not sponsoring this, but it's one I listen to. It's good.

eddie-b--has-them-_1_01-27-2026_140511

but they can, if.

rory-liebhart_1_01-27-2026_140512

Yeah, they can absolutely, absolutely. Bloomberg hit us up. Um, but the chief investment Officer. Blackstone's private credit and insurance business was on and was talking very much about sort of that level of transparency and uh, connection with, uh, with your LPs is, is indeed a competitive advantage, you know, and so if the big guys are going to lead with that, others are gonna have to follow to Ed's point to, you know, to kind of even stay in the game. So, you know, to your, to your question, Emily, um. know, people don't ask for things or require things just for the sake of it. It, it matters. And I'd say like, one of the things about the private markets in the past is that because it, it represented a alternative to yielding, people want yield, right? So, you know, it, it re represented a higher yield opportunity that people wanted and for a time. It was totally acceptable to be like, just trust me. I mean, you know, I'm, I'm oversimplifying a little bit, but, but it, it was very much like behind the black box. Hey, I know what I'm doing. We're really good at this. Um, you know, do you want it or not? And now it's more like, more actively having to court,

eddie-b--has-them-_1_01-27-2026_140511

Yeah.

rory-liebhart_1_01-27-2026_140512

um, LP capital because it is being taken up by the big guys in a lot of ways. But again, there's just so much capital out there, so it's like there's enough to go around, don't get me wrong, but like, you know, it, it's, uh, you know, there's more scrutiny on it right away.

emily-sander_1_01-27-2026_140514

PE firms are desperately trying to get out of these deals right now. Are are like, does this take attention away from the new deals they're bringing in? Or it's like, Nope, they're doing that as well, but they're all, they're a little bit,

rory-liebhart_1_01-27-2026_140512

Well,

emily-sander_1_01-27-2026_140514

panic, but they're a little bit,

rory-liebhart_1_01-27-2026_140512

would say

emily-sander_1_01-27-2026_140514

or is it.

rory-liebhart_1_01-27-2026_140512

some plates being spun because I'd say that this year we should expect, and I think, I mean, Cascadia takes this position as well. That, you know, deal volumes and deal environment is gonna be better than it has been in the last couple years. And I think everybody's mainly believes that due to one, the supply, as we talked about, like you do have all of these in the tooth funds that are needing to transact, but two, the interest rate environment is the obvious Next. Next point to that is it's getting better, although. We've talked about it a lot. It's not gonna be like it was five years ago. I just don't see that happening. But, you know, it, it does make a difference. Even if rates move down 50 to a hundred basis points, it, it actually moves the needle quite a bit.

eddie-b--has-them-_1_01-27-2026_140511

Yeah.

rory-liebhart_1_01-27-2026_140512

think a cacophony of factors make it that there's just gonna be more deal volume. So if you're an investment banker right now, you're loving life. If you're a lo like a, like a transaction lawyer, you're loving life. You know it's gonna be good for you. For sure.

eddie-b--has-them-_1_01-27-2026_140511

Well, and, and to get the, to get the returns and some of the, some of the advantages that folks are looking for in the transaction that.

rory-liebhart_1_01-27-2026_140512

Mm-hmm.

eddie-b--has-them-_1_01-27-2026_140511

advantage? How do you, because where before, when you have a big, when you have a big return, not that they don't kind of le you know, kind of try and, and optimize, but. Yeah, there's less pressure to try and extract every dollar from the transaction.

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

you've got a very narrow spread and you're trying to kind of squeeze every dollar out of it, you're gonna see more creative structuring, which, you know, for folks, you know, like attorneys, it's not a bad answer to try and figure out how to do, you know, creative earnouts on both sides and, and, or, you know, retained, retained interest or. You have a, a tax structuring that might be advantageous to try and get a little bit higher return, um, on the, on the transaction? Either on the, in, on the in or on the out.

Secondary Market Strategies

rory-liebhart_1_01-27-2026_140512

Yeah. Yeah.

emily-sander_1_01-27-2026_140514

Are there any PE firms that are changing their strategy to, to basically set themselves up to be like, we'll buy, like, we'll be the second buyer. Like we will pull some of those ones they. What would, what

eddie-b--has-them-_1_01-27-2026_140511

There's, I.

emily-sander_1_01-27-2026_140514

like,

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

yeah.

rory-liebhart_1_01-27-2026_140512

I actually have

emily-sander_1_01-27-2026_140514

Adapting.

rory-liebhart_1_01-27-2026_140512

a few specifically actually, um, now that you mentioned that, um, that basically they, they construct a strategy almost entirely around, uh, secondaries secondary buying, secondary interests in, in, in businesses from other private equity. So it, it is. And I don't know if I'm using the term correctly at cottage industry, but like it, that is actually happening. I've seen, I've seen some pitch books asking me to an lp. It's like, this is what we're doing. We're, we're buying up secondaries because we're, they're hitting this wall of to liquidate. So it's happening. And you know, I've, now I, I have passed on a couple of those and then I'm here later that, you know, that was a mistake'cause it's killing it, but

emily-sander_1_01-27-2026_140514

Uh, what would, what would make it a good. Purchase for the PE firm, like the one buying it on the secondary market because the first one's like trying to get rid of it. Why does that, why is that attractive to another PE

eddie-b--has-them-_1_01-27-2026_140511

Because you make money on the buy.

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

and that's okay, but

eddie-b--has-them-_1_01-27-2026_140511

So

emily-sander_1_01-27-2026_140514

like a thing they have to hold for years and years and years and might not be able to get out of.

eddie-b--has-them-_1_01-27-2026_140511

Yeah. But they may be in a position where they're going, look, it's, we're at the beginning of our newest fund. We've got a seven year, seven year run. This other PE firms at the end of their fund life and they need to liquidate. And so, you know, it may be five years before we think we're gonna be able to flip this investment. To get the returns we're looking for, but we can do that where the first firm, where the, the selling firm cannot.

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

So timing

eddie-b--has-them-_1_01-27-2026_140511

Yeah.

rory-liebhart_1_01-27-2026_140512

it's much

emily-sander_1_01-27-2026_140514

might sink up.

rory-liebhart_1_01-27-2026_140512

the, I wouldn't say like, well, how do I put it? It's more about the circumstances regarding. Why that opportunity is coming to market, IE the fund dynamics from the seller

emily-sander_1_01-27-2026_140514

Yeah.

rory-liebhart_1_01-27-2026_140512

much more about that than the perhaps the underlying operating companies that are, you know, these interests represent, if that makes sense. Like the businesses are just doing their thing as an operating company, but you have these structural factors that are the reason for the sale as opposed to like a distressed sale of a company. That's a totally different

emily-sander_1_01-27-2026_140514

Yeah,

rory-liebhart_1_01-27-2026_140512

you know, so, yeah. Um.

emily-sander_1_01-27-2026_140514

so it might be a timing element. It might be, I'm also trying to think like maybe there's somewhere. Like our, our like boutique firm is like tailor made for this specific type of whatever purchase. And we don't normally get bites of the apple for these types of deals, but because people are trying to spin them off, like we'll gobble some of those up where we ordinarily wouldn't want to or be able to.

rory-liebhart_1_01-27-2026_140512

yeah. I mean, a good example of a buyer. such, such an interest, like a secondary's interest would be like family offices and things like that. Um, you know, that that is, um, that's an example of other types of investors at the table for this type of thing that just maybe wasn't as much as prevalent, you know, four or five years ago. So, yeah.

emily-sander_1_01-27-2026_140514

What are some other big considerations this article brought up?

rory-liebhart_1_01-27-2026_140512

Yeah, I just, I thought this, I really did think that the view that the industry is gonna shed 30 to 40% of its players was just like, that kind of was like the, the one that jumped out at me. But and large, you know, it, it's. It's, I don't know, like I haven't seen a group take a hard position on the structural shift permanently as this one did, which is why it stuck out to me. Um, but they bring up some great points, which, you know, we've talked about. But I think, you know, some of it to be seen as far as, you know, just how, forced, I, I guess just how forced are some of these private equity companies going to be to sell, you know, like. Hard, hard to say. You know, how that, how, how hard line that will be, you know?'cause wants to sell at a loss, let's just face it. You know?

emily-sander_1_01-27-2026_140514

Yeah.

rory-liebhart_1_01-27-2026_140512

wants to mark to market at a loss, you know?

emily-sander_1_01-27-2026_140514

Do you two think? So I know before we talked about it depends how they're counting stuff and how you, you know, tilt your head and filter it this way, but,

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

do you think that there'll be like a like this is gonna be a crazy year for PE.

rory-liebhart_1_01-27-2026_140512

My personal view is it's not gonna be. Crazy. I think it'll just be a continuation of the last year in gradual, mostly because I think that this is my view, like interest rates aren't gonna move that much. There's just too much going on, um, politically, and so I just think it'll be kind of like, you know, a, a little, there'll be higher deal, deal, deal transaction growth, both dollars and count, but nothing crazy. It's not gonna be a breakout year, I'd say.

eddie-b--has-them-_1_01-27-2026_140511

No, I agree. I agree with, I agree with you, Rory. I think the, the year's gonna be one of, again, I think we saw some of this last year. It's a little clogged up. There's not a lot of excitement going on. There's not a lot of buyers. Um, who are willing to pay up what the sellers need in order to be able to realize returns that they're expecting. And they're not gonna want to take the mark on the book. So they're gonna hold for another year and, you know, continue to kind of continue to carry and see, kinda see what next year brings.

rory-liebhart_1_01-27-2026_140512

Yeah. Yep.

emily-sander_1_01-27-2026_140514

kind of a pattern. You guys have said like these articles, like they're trying to make a big deal, add some drama, but really things are gonna be just fine.

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

things, things aren't gonna be, yeah, I think just fine. Might be a stretch. They're, they're not gonna be, because the other side of that, it's kind of like when you own real estate, you, you only lose money when you actually, when you actually sell it.

rory-liebhart_1_01-27-2026_140512

Mm-hmm.

eddie-b--has-them-_1_01-27-2026_140511

you know, it's an unrealized gain or loss. And so I think in this particular case. Folks are gonna be like, yeah, we're gonna, we're just gonna ostrich ourselves, stick our head in the sand, not, not realize how much we've lost on this thing, and we'll deal with it later.

rory-liebhart_1_01-27-2026_140512

yeah.

eddie-b--has-them-_1_01-27-2026_140511

And that's why it's not a catastrophe, but it's also not a good answer.

rory-liebhart_1_01-27-2026_140512

Well, I think the practical aspect to it from my perspective is that I have every amount of faith in the world that these PE funds know how to structurally engineer their way in or out of something in a way that's beneficial. Like so there's ways to. Re-engineer the financing. There's ways to re-engineer the tax implications, things like that. So, I don't know, like it's almost, it's not, I wouldn't say a cynical position, but, but more of just like, they're gonna figure out a way where it's not gonna be a bloodbath, you know? Um, and, and so if it's not a bloodbath from the seller standpoint, it doesn't, it means it's not gonna be a bonanza from the buyer standpoint, it's just gonna be, you know, a little ebb and flow perhaps.

emily-sander_1_01-27-2026_140514

Is there any advantage to these being held longer where it's like, oh, we don't like to do this typically, but actually this could be good for this reason.

rory-liebhart_1_01-27-2026_140512

Uh, it's kind of a moving target, I guess, you know, like is there an advantage? Well, if you have a underlying business portfolio, portfolio of operating companies are just killing it, time can be on your side, you know? Why,

emily-sander_1_01-27-2026_140514

Hmm.

rory-liebhart_1_01-27-2026_140512

not ride out that growth, you know, and eventually transact, you know?

eddie-b--has-them-_1_01-27-2026_140511

Yeah, I, I agree with Rory. I think it's a, if, if you have liquidity,

rory-liebhart_1_01-27-2026_140512

There you

eddie-b--has-them-_1_01-27-2026_140511

you're not for, so the business itself has liquidity and you, it can carry

rory-liebhart_1_01-27-2026_140512

yeah.

eddie-b--has-them-_1_01-27-2026_140511

you're not being forced. By contract or extreme pressure by the LPs to do something.

rory-liebhart_1_01-27-2026_140512

Yeah.

eddie-b--has-them-_1_01-27-2026_140511

Then the best option, you know, again, they, I go back to one of the folks that Rory and I used to work with that always would talk about optionality and, you know, the co My comment was always, well, options aren't free. So, you know, you're, you're paying a, there's a cost for an option, but by not selling, you're maintaining essentially the option to sell later. And so you're going, look, I'm not gonna exercise my option to sell at this point. I'm gonna continue to hold because I can. Now, there's a cost associated with that, which is. Potentially the return to the LPs. It's certainly a cost in liquidity. The expectation is that you'll get a return for that hold period. But as long as the, as long as you're not pouring more capital into that portfolio company, the portfolio company doesn't look like it's about to take a dump and the limited partners aren't going, I need the money back now. Pound, pound, pound. And you can convince them that, you know, this is the best strategy at this time for this particular investment, then you know, that's, that's a good answer. The flip side of that is there needs to be a good look in the mirror as to whether freeing up that capital out of that investment, even at a loss, could be better deployed in a different investment that someone else is selling right now at a, in a position where they're needing to get liquid. So, you know, and that's, and so there's some of this, yeah, I'm gonna sell at a loss because I'm gonna buy something I need. I can use that liquidity to buy something that's gonna get me a better return. This I don't think will get me that return over the long haul.

rory-liebhart_1_01-27-2026_140512

Yeah. Mm-hmm.

eddie-b--has-them-_1_01-27-2026_140511

Yes. Economics. They're all about trade offs.

Super Bowl Predictions

emily-sander_1_01-27-2026_140514

so those were your predictions for, is this gonna be a total watershed game changing year, it sounds like? Nah, not, not really. Um, most important prediction. Who will win the Super Bowl and by how much?

rory-liebhart_1_01-27-2026_140512

Ooh,

eddie-b--has-them-_1_01-27-2026_140511

Oh,

rory-liebhart_1_01-27-2026_140512

second question's. The hard one. I'm going with the Hawks as the winner.

emily-sander_1_01-27-2026_140514

Yes, that

eddie-b--has-them-_1_01-27-2026_140511

oh, yeah.

emily-sander_1_01-27-2026_140514

the correct answer

rory-liebhart_1_01-27-2026_140512

Yeah.

emily-sander_1_01-27-2026_140514

by seven 10.

rory-liebhart_1_01-27-2026_140512

Um, somewhere between seven and 14. So yeah, we could call it 10.

emily-sander_1_01-27-2026_140514

Okay.

eddie-b--has-them-_1_01-27-2026_140511

I am going with a different answer. I'm going with Seahawks

emily-sander_1_01-27-2026_140514

Oh, okay.

eddie-b--has-them-_1_01-27-2026_140511

and they're gonna win by 24.

emily-sander_1_01-27-2026_140514

Whoa, blowout. Nice.

rory-liebhart_1_01-27-2026_140512

kind of like

emily-sander_1_01-27-2026_140514

Here's the thing. This is,

rory-liebhart_1_01-27-2026_140512

almost.

emily-sander_1_01-27-2026_140514

this is why that could come true though, is because. Patriots. Everyone was like, Drake May. Drake May is amazing. And he is for a second year quarterback in a conference that wasn't that competitive and the Seahawks had to bust their tail through the most competitive division in the entire league. So,

rory-liebhart_1_01-27-2026_140512

well, well said.

emily-sander_1_01-27-2026_140514

and I, and I watched both games this weekend and I was like, any, if, if, if the Seahawks beat the Rams, either one of these teams, we will crush or we can crush. So it might be a blowout might, I'm gonna say 50 to 10.

rory-liebhart_1_01-27-2026_140512

I hope so.

eddie-b--has-them-_1_01-27-2026_140511

What, what?

emily-sander_1_01-27-2026_140514

I love my Seahawks.

rory-liebhart_1_01-27-2026_140512

Let's go.

emily-sander_1_01-27-2026_140514

they're gonna make a statement. That's my,

rory-liebhart_1_01-27-2026_140512

Hell

emily-sander_1_01-27-2026_140514

that might have been, that might have been

rory-liebhart_1_01-27-2026_140512

It'd be

emily-sander_1_01-27-2026_140514

a moonshot.

rory-liebhart_1_01-27-2026_140512

the Super Bowl win against the Broncos, the, the, you know, 2013, it was like total blowout, you know, I'd like to see that. Why not? It'd be

emily-sander_1_01-27-2026_140514

Why not? All right. Thanks big rigs.

rory-liebhart_1_01-27-2026_140512

Thanks, ed.

eddie-b--has-them-_1_01-27-2026_140511

Thanks em.

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