As Halloween approaches, I thought it fitting to write about something that has been haunting me for the past several years. This topic doesn’t exactly fit into the LP/GP relationship scenarios I usually analyze, but slime from its far-reaching tentacles affects almost everyone involved in private investing. I remember starting my career as a private equity analyst twenty-odd years ago; it was like wading in a mostly undiscovered stream. Everything seemed fresh and new. I would mention what I did for a living at dinner parties, and the majority of people had no clue what private equity was. I was not even a mover and shaker in that world; I was one or two levels removed from the action – just a young analyst assessing what the people in the trenches actually did. I still felt I had serendipitously stepped into a field with endless potential, because conversations with GPs always centered around low-hanging ways in which target/ existing portfolio companies could be improved and then sold at a profit. Everything felt additive. Nothing felt harmful – the clearly stated and very believable goal was to eliminate inefficiencies and to strengthen and position companies for long-term success.
Although warnings about the risks of high leverage and the aggressive nature of corporate takeovers and take-private deals were occasionally mentioned in newspapers and books, such as “Barbarians at the Gate,” the industry’s overall reputation remained relatively intact as an innovative way for sophisticated institutions and wealthy individuals to diversify their portfolios and pursue outsized returns. However, as the private equity industry grew, and investment strategies started to multiply and stratify with a plethora of investment bankers claiming their stakes, the asset class, seemingly overnight, moved from a somewhat underground, if you know you know, beautiful phenomenon to something the mainstream considers today as evil and exploitative on so many levels. It even hurts to mention this out loud, because, as mentioned, I am just a person who reviews funds and investment opportunities, but the raw material that makes my work possible is constantly being demonized. From an untrained eye’s perspective, the asset class deserves the criticism it gets. However, from the perspective of those of us able to distinguish quality from triviality, we see that there is value there, even if a few bad or overly greedy actors have hijacked the narrative. So why are private investment strategies so demonized these days, and what can we, the people who work in it, do to combat the ongoing negative press?
Why is the private asset class so demonized today?
- All industries and sectors are fair game: As private investing has grown and attracted a wide range of participants, the quest for investment opportunities has infiltrated every industry and sector. Name me an industry or sector, and I’ll find you numerous private equity investors who specialize or dabble in it. This means private investing strategies and parlance have bled into the mainstream, and those affected by it (especially if their experience was negative) are making their voices heard.
- Private equity executives have been inducted into the “bad rich people” ranks: In the past, steel tycoons, oil barons, and even hedge fund managers were often seen as the villains who had done something nefarious to amass their wealth. These days, the ultra-visibility of private equity funds has led the mainstream to induct its players into the “bad rich people” club. Tax loophole use, perceived excessive fees on managed investment vehicles, publicized ostentatious lifestyles, questionable friend circles, and so on—all turbocharge the ascent into this club.
- Proximity to technology and innovations deemed as intrusive, controlling, and surveilling: It is easy to draw a line that connects private investing capital to the most successful technology companies that seem to be running everything from media, politics, investment markets, and the economy. As the wrath of the public increasingly turns on these well-known and uber-wealthy companies and individuals, it is easy to see why their private equity funders would also catch some stray shots.
- Bad news about private equity that hits the airwaves is always really, really bad: Even I have to do double takes sometimes when I hear about some private equity deals that went sideways in the nursing home, healthcare, retail, housing, etc., space that treated customers and/or employees horribly. Additionally, when the general public learns about the staggering amounts of money lost in deals like WeWork and Theranos, sympathy for the whole industry disappears. If people are already skeptical about the morality of an entire asset class, such negative stories do little to help soften views.
- Perceived elitism: Given the elite schools and influential social clubs that many private equity bigwigs attend, along with their general profile, there is a hard-to-shed perception that only certain people can flourish in the asset class. Private investing, as an investment category, has an image problem that will likely take some time to resolve, because most images are a reflection of reality.
How can we combat the demonization of the private asset class?
- By using its ubiquity as a strength: I believe that the fact that private equity bleeds into all aspects of life is not necessarily a bad thing. If executed correctly (a crucial caveat), it could be argued that efficiency, operational improvement, and capital discipline are being introduced into all industries and sectors, which, in theory, should lead to better goods and services. Of course, there will be some losers in the process, but the science of economics teaches us that resources should generally be used where they are most effective. Therefore, perhaps displacements can fund the use of resources in other, relatively more productive fields.
- Broadcasting the good parts to counter the loud bad parts: The private asset class, despite the truths about its problems, has many good attributes to it that must be told to the masses. Yes, the folks at the very top of private equity’s food chain have accumulated unfathomable wealth that seems quite unfair due to how it is generated. However, think of the derivative opportunities that have been created for analysts, researchers, enterprise software creators, programmers, college endowments, auditors, accountants, consultants, secretaries, lawyers, operators, real estate brokers, janitors, airlines, etc., because of this asset class. It is an integral part of the economy that makes significant contributions to societal uplift. Yes, more can be done to share the tremendous wealth at the top, but there is enough capital in the middle and bottom to maintain decent lifestyles.
Additionally, I have met many private equity managers from both elite and non-elite backgrounds who embody values of inclusivity and fairness. In the venture capital world, which has historically demonstrated lower elite barriers to entry, I have encountered people who have been able to change a generational trajectory of poverty and dysfunction. I can recall many conversations with investment managers who are using their wealth to create real change in the world, whether socially or environmentally. These stories must be echoed louder. Every area of life has both good and bad actors, so I believe it’s everyone’s responsibility to emphasize the positive, especially when negative narratives distort core truths.
- Give me a slice: Sometimes, the inability to participate in something causes resentment. I’m not claiming that everyone who views private equity as evil does so because they can’t participate in it, but I believe that expanding the group of people who can benefit from the asset class’s positive aspects will lead to better understanding and more accurate judgment of what is good and bad within it. The current “democratization of access” movement, which, in my view, still tends to invite the more privileged in society into the asset class, is a step in the right direction. However, plans to allow 401(k)s and 529 plans to participate in private equity could be a real game-changer, broadly spreading the benefits of an asset class that many of us genuinely love.
Ultimately, the private asset class faces an uphill battle in reshaping public perception, but its positive impact and widespread influence should not be overlooked. By fostering greater inclusivity and broadcasting stories of genuine social and economic progress, the industry can help counteract negative stereotypes. If more people are empowered to participate and benefit, a fairer and more balanced narrative will emerge, reflecting the true potential of private investing.
Anthony Kwesi Hagan
Founder and Head of Research, FreedomizationTM
October 19th, 2025
