Hi , we hope you’re having a great post-election Wednesday!

In this week’s deep dive, we reported on private equity’s imperative need for liquidity solutions, with secondaries and continuation funds rising as efficient alternatives for such demand.

We also interviewed a senior MD to gain insights for our consultant friends who want to forge the best partnerships with PE clients.

In macro fintech news, rising interest rates and customer acquisition costs are tightening margins with both fixed and variable costs consistently increasing over the last 5 years.

And lastly, KKR and Energy Capital Partners struck a $50B partnership to strengthen AI and cloud computing infrastructure.

Cheers to tackling this election week!

— Team PE 150

In this Issue:

• Data Dive

• Trend of the Week

• Deal of the Week

• Vendors Survey

• Macroeconomics Corner

• Interesting Articles

• Tweet of the Week

📚 Data Dive

Capital Unbound: Exploring New Liquidity Solutions in Private Markets

As private equity (PE) firms and private companies face growing demand for liquidity, traditional pathways like IPOs and trade transactions are being supplemented by alternative solutions. Stakeholder expectations are pushing companies to address liquidity not just for capital gains but to enhance employee retention and align business goals. New strategies—like secondary transactions, continuation funds, and direct transactions—are expanding to meet these needs, allowing firms to maintain flexibility amid volatile markets.

In this report, we explore the critical rise of the secondaries market, which has grown from $25B in 2012 to $112B by 2023, and the increasing use of continuation funds to extend asset holds without full exits. With $171 billion in dry powder, yet only a fraction of private equity’s $5.3 trillion AUM, liquidity solutions are essential as firms respond to prolonged hold periods and shifting exit strategies. Key insights reveal how PE is leveraging these evolving tools to create resilience, optimize liquidity, and manage risk across an unpredictable economic landscape.

📈 Trend of the week

Cost Crunch: Fintechs' Next Moves

Fintechs have a double headache: rising interest rates and skyrocketing customer acquisition costs (CAC). With overheads piling up, some are playing matchmaker. Take June’s eBay-Venmo deal, which lets eBay buyers use their Venmo balances—instant customer access. Meanwhile, big fish like SoFi are chasing bank charters to boost margins, and Robinhood is banking less on transaction fees. The writing's on the wall: fintechs can’t afford to be one-trick ponies anymore.

🤝 Deal Of The Week

KKR and Energy Capital Partners forge $50B infrastructure partnership

KKR and Energy Capital Partners (ECP) are going big, announcing a $50 billion investment deal to beef up infrastructure supporting the AI and cloud-computing wave. Leveraging KKR’s infrastructure and real estate muscle alongside ECP’s strategy pipeline, the two aim to provide scalable data and power solutions globally, positioning themselves as the providers of choice for tech giants seeking serious model training and storage capacity. No wonder KKR is bullish—its infrastructure division raked in a robust 18% return LTM, marking it as their crown jewel. Meanwhile, Blue Owl is ramping up, acquiring IPI Partners and adding 82 data centers to go toe-to-toe with KKR.

📋 Consultant Corner - Exclusive Insights For Consulting Partners

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We recently surveyed a senior PE sponsor to learn what top vendors are doing to secure—and keep—their clients. In today’s competitive M&A landscape, cost-consciousness and flexibility are key.

Here’s what stood out:

• Dead Deal Fees: A Make-or-Break Factor

Dead deals from failed transactions pile up fast. Vendors offering discounted or flexible terms for dead deal fees win more repeat business. One sponsor even hinted they'd pay a premium for firms that “weather the dead” alongside them.

• The Power of Exclusivity

Exclusive relationships with law and accounting firms are on the rise. PE firms prefer a streamlined approach with a single partner who “gets” their process, making each deal more efficient and cost-effective. Vendors that offer preferential rates for exclusive partnerships get the upper hand.

• In-House Service Models & Creative Alternatives

Some PE firms are bringing support in-house to keep costs predictable. Vendors that can mimic this by providing dedicated teams or tailored service bundles for portfolio companies are gaining traction.

• Managing Lender Restrictions on Fees

As lenders tighten control over management fees, vendors with flexible fee models are in high demand. PE firms favor vendors who can work around fee limits with creative service packages, avoiding added strain on management budgets.

Bottom Line: Vendors that adapt to PE needs with flexible fees, exclusive relationships, and innovative service models are seeing the most success. Adaptability isn’t just a perk—it’s a deal-winner.

📊 Macroeconomics Corner

Financial Stability's Split Screen: Short-term Relief, Long-term Risks

While the global economy edges toward a soft landing, near-term financial stability looks promising, fueled by rate cuts and buoyant asset prices. But here’s the twist: long-term vulnerabilities are building up. Easy money is driving up asset valuations, debt levels, and leverage, making the financial system more fragile—think 2008 déjà vu. Meanwhile, low market volatility masks growing geopolitical risks, setting the stage for sudden sell-offs. With a potential disconnect looming between uncertainty and asset prices, central banks must balance rate cuts with vigilance, and policymakers need to focus on robust regulatory measures to prevent deeper systemic risks.

📰 Interesting Articles

🐣 Tweet of the week

"Risk more than others think is safe. Dream more than others think is practical"

Howard Schultz