When the economy shrinks, consumers respond by paying down debt, saving more, and spending less on nonessential goods. Institutional investors, on the other hand, adjust the “tilts” of their portfolios. They allocate more to defensive assets like private debt and real assets and seek reassurance from larger, more familiar private equity fund managers.
This comes at the expense of small, emerging, and, by extension, diverse managers, which some regard as riskier than their larger, “more proven” counterparts.
This report explores this tendency to cut back on small-market buyouts (SBO) and makes the case for why now may be the time to lean in.
