The Evolution of Private Equity: Emerging Trends and Investment Opportunities

Private equity has become one of the most interesting corners of the investment world. Once focused mainly on buying and restructuring established businesses, the field has grown into a more diverse space.

Today, private equity is a $5.7 trillion market that’s opening up new and exciting ways to invest. Two areas, in particular, are gaining serious traction: secondaries and growth equity.

Secondaries let investors buy and sell stakes in pre-IPO companies, offering more flexibility and quicker returns. Growth equity focuses on fast-growing businesses that are nearly ready to go public, providing investors with an opportunity to get in before the IPO spotlight.

In this article, we’ll walk you through what private equity is all about, why secondaries and growth equity are making waves, and how these trends are creating fresh opportunities for investors looking beyond the stock market

Private equity offers a pathway to invest in private companies beyond public markets. It has become a key component of modern investment strategies. Understanding private equity helps investors explore options beyond traditional markets.

Defining the Private Equity Market

At its core, private equity involves investing directly in private companies or acquiring public companies to take them private. The scope of what's included in "private equity" can vary depending on the definition used. In its broadest sense, private equity encompasses various strategies including leveraged buyouts (LBOs), growth equity, venture capital, and sometimes real estate and other alternative investments. For this discussion, we'll focus primarily on the core strategies of buyouts and growth equity.

Unlike public markets, where companies are traded openly on exchanges and required to disclose financials regularly, private markets are more exclusive. Ownership tends to be concentrated among a smaller group of investors, and regulatory requirements are lighter. This environment brings both greater risk and the potential for outsized returns, especially for well-informed investors.

As of 2024, the global private markets have grown to over $5.7 trillion. This rapid expansion shows a growing appetite among both institutional and individual investors seeking long-term opportunities beyond the public markets.

Who’s Involved in Private Equity?

Private equity centers around two key players: General Partners (GPs) and Limited Partners (LPs).

General Partners are the fund managers. They source, acquire, and actively manage portfolio companies, overseeing every stage—from due diligence and acquisition to operational improvements and eventual exit. In return, GPs earn a management fee and a share of the profits, known as carried interest.

Limited Partners are the primary capital providers. These typically include institutional investors like pension funds, insurance companies, endowments, and sovereign wealth funds, as well as family offices and high-net-worth individuals (HNWI). LPs commit capital to the fund but have no involvement in day-to-day investment decisions.

A typical private equity fund follows a multi-year lifecycle that includes:

1. Fundraising, where capital is secured from LPs.
2. Investing, when the fund acquires stakes in selected companies.
3. Managing and improving, as the GPs work closely with these companies to grow and strengthen them.
4. Exiting, where the fund sells its stakes, ideally at a profit, and returns capital to its investors.

Let’s look at the main ways private equity firms put capital to work. These core strategies define how funds target opportunities, create value and ultimately deliver returns to their investors.

Leveraged Buyouts (LBOs)

Leveraged buyouts are a common private equity strategy where firms buy established companies by combining their own money with borrowed funds. Think of it like buying a house with a mortgage—using some savings plus a loan. The company’s own assets and cash flow help secure the loan.

These deals usually target mature businesses with steady revenues—companies that are more predictable and stable. The private equity firm then works to improve the company’s operations, cut costs, and strengthen finances to increase its value. After making these improvements, the company is eventually sold, ideally for a profit.

While this strategy has been the backbone of private equity for years, it’s generally more suited for institutional investors due to the scale and complexity involved.

Growth Equity (Pre-IPO Stage)

Where LBOs focus on control and restructuring, growth equity targets minority positions in expanding businesses. These companies are already generating revenue and require capital to accelerate growth, often in preparation for a public listing or strategic sale. Growth equity does not rely on debt but on the company’s capacity to scale.

Investor interest in growth equity has increased, driven in part by Switzerland’s low interest rate environment and the fact that capital gains on privately held investments are typically tax-free for individual investors. With interest rates still relatively low in Switzerland and capital gains on privately held investments typically tax-free for individual investors, growth equity—particularly in pre-IPO companies—has become an increasingly attractive opportunity.

Historically, much of a company’s value appreciation occurred after it went public. Today, however, companies stay private longer, meaning a significant portion of the upside is captured before IPO. For Swiss investors seeking long-term capital appreciation rather than short-term income, this aligns well with the country’s tax treatment, which favors capital gains over interest or dividend income. Moreover, platforms like Swissquote are making access to these previously exclusive opportunities more democratic, providing the tools, research and infrastructure retail investors need to participate confidently in late-stage private markets.

Private equity has long been associated with long-term commitments and limited liquidity. The growth of the secondary market is changing that dynamic. Investors can now buy and sell existing stakes, offering greater flexibility and broader access to private assets. This shift is reshaping how capital flows within the private equity ecosystem.

What Are Secondaries in Private Equity?

Secondaries involve acquiring existing interests in private equity funds or companies from other investors. This differs from primary investments, which fund new deals directly. By enabling transactions in existing assets, secondaries provide liquidity in an otherwise illiquid market.

There are two main types of secondary deals. LP-led transactions occur when limited partners sell their fund stakes. GP-led transactions involve general partners restructuring holdings or extending fund terms through continuation vehicles. Both have grown in volume and sophistication.

Market Growth and Trends on Secondaries

The secondary market experienced significant momentum in 2024, with total transaction volume reaching $162 billion—a 45% increase over the previous year.

This growth was driven by both LP-led and GP-led activity. LP-led transactions totaled $87 billion, accounting for 20% of all private equity exits, which is double the 10-year average. Meanwhile, GP-led deals hit a record $75 billion, the highest level ever recorded.

Looking ahead, the trajectory remains strong. Forecasts suggest the market will exceed $200 billion in 2025, with longer-term projections ranging between $500 and $800 billion. Several factors are fueling this expansion: maturing funds in need of liquidity, increased transparency in asset pricing, and the rise of digital platforms that simplify and accelerate secondary transactions.

How Investors Benefit from Secondaries

Secondaries are becoming an increasingly strategic allocation in private equity portfolios, and for good reason. These investments typically involve more mature assets with established performance histories, which often translates to shorter holding periods and greater visibility into valuations.

Compared to traditional primary fund commitments, secondaries may offer:

• Lower risk profiles
• Faster capital deployment
• Stronger diversification across vintages, managers, and sectors
• Greater portfolio flexibility, enabling investors to rebalance more efficiently and manage liquidity with precision

As a result, secondaries are no longer viewed as niche or opportunistic—they’re becoming a core component of how institutions and sophisticated investors access and manage private market exposure.

Private equity is no longer confined to large institutions. Shifts in regulation, investor demand, and technology have opened the door to broader participation, giving individuals more ways to access private markets.

How Can You Invest in Private Companies?

Private equity was once limited to institutions and large investors through long-term commitments in private equity funds. These investments typically required high minimums and long lock-up periods, making access difficult for individuals.

Interest from high-net-worth individuals has led to new access points. Feeder funds, co-investment structures, and private market platforms now allow smaller investors to participate in deals. These channels reduce barriers while preserving exposure to private equity strategies.

New providers have also improved access for accredited investors. These platforms offer curated opportunities, often with lower minimums and simplified subscription processes, helping expand participation in private markets. As options for private investors remain scarce, Swissquote is committed to bridging this gap by providing innovative access to private market opportunities.

As the official executive launch partner of the Stableton Unicorn Index AMC, Swissquote gives private investors exclusive access to a portfolio of the world’s most coveted private tech companies, including OpenAI, SpaceX, Revolut, Stripe, xAI, and Anthropic. This groundbreaking product, available only to Swiss residents and only on Swissquote’s platform, is the first of its kind to track the performance of a private market index. By lowering the barriers to entry and simplifying access, Swissquote is not only opening the door to private markets—it’s reshaping how Swiss investors build diversified, future-focused portfolios

Why More Investors Are Turning to Growth Equity and Secondaries in 2025

Secondaries provide access to assets already in progress, offering shorter holding periods and clearer valuation data. These features appeal to investors seeking liquidity and reduced risk compared to early-stage commitments.

Growth equity targets late-stage companies preparing for public offerings or acquisitions. These investments offer potential for strong returns without the uncertainty of earlier funding rounds. When combined with access to high-quality private market opportunities through platforms like Swissquote, retail investors can now participate in late-stage growth with greater efficiency and confidence.

As private equity becomes more accessible, understanding portfolio diversification within the asset class is increasingly important. However, private investors face significant limitations compared to institutional investors when it comes to building truly diversified private equity portfolios.

The Ideal vs. Reality for Private Investors

• Institutional access: Professional investors can build comprehensive private equity portfolios by combining multiple strategies—secondaries, growth equity, venture capital, and buyout funds—across different managers, vintage years, and geographic regions. They have access to co-investments, can commit to numerous funds simultaneously, and benefit from lower minimum investments relative to their portfolio size.
• Private investor reality: For individual investors, direct access to this level of diversification remains challenging. Most institutional-quality private equity funds require minimum commitments of €1 million or more, making it difficult for private investors to spread risk across multiple managers and strategies.

Private Equity Investment Strategies Available to Private Investors

Despite these limitations, several pathways exist for private investors seeking private equity exposure:

• Listed vehicles and public markets: While direct buyout deals are often reserved for institutional investors, private investors can gain exposure through listed private equity funds, business development companies (BDCs), or exchange-traded funds (ETFs) focusing on private equity and growth companies. These instruments provide liquid access to private market strategies, though they may not deliver the same return profiles as direct private equity investments.
• Alternative investment platforms: Providers like BlackRock started offering private equity products for individual investors (via ELTIFs), though these typically require higher minimums of €25'000 or more, making diversification across multiple funds challenging for many investors.

Investment Philosophy for Private Equity

This multi-strategy approach echoes investment principles popularized by renowned investors like Peter Lynch and Warren Buffett. Lynch's idea to "buy what you know" encourages understanding the companies or sectors you invest in, while Buffett's emphasis on quality and long-term value highlights the benefits of combining different investment stages and styles to reduce risk and maximize returns.

For private investors, blending secondaries, growth equity, and venture capital exposure—directly or via liquid instruments—can build a resilient portfolio that balances stability and growth across market cycles, even when working within the constraints of higher minimums and limited access.

Starting Your Private Equity Journey

For many private investors, the most practical first step may be accessing systematic private market strategies through products like index-based approaches to private equity. Swissquote's exclusive offering of the Stableton Unicorn Index AMC provides direct access to a diversified portfolio of pre-IPO tech unicorns without the typical barriers of traditional private equity investing.

As the private markets continue to evolve, Swissquote is committed to expanding access to additional private market opportunities, helping bridge the gap between institutional and private investor access.

Key Considerations for Private Investors

• Start small and focused: Rather than trying to replicate institutional diversification immediately, begin with one or two high-quality products that provide broad exposure
• Understand liquidity constraints: Private equity investments typically require longer holding periods, so ensure you can commit capital for extended periods
• Consider your total portfolio: Private equity should complement, not replace, your broader investment strategy
• Monitor minimums and fees: Higher minimum investments and fee structures can significantly impact returns for smaller portfolios

While private investors may not achieve the same level of private equity diversification as institutions, thoughtful selection of available products can still provide meaningful exposure to this important asset class.

Private equity is evolving rapidly as new technologies, priorities, and market niches reshape how firms find deals, manage risk, and generate returns. Understanding these changes helps investors anticipate where the best opportunities—and challenges—will arise.

New Frontiers: AI, ESG and Mid-Market Opportunities

The private equity landscape is shifting in several exciting ways:

• AI and data-driven sourcing are transforming how deals are identified and analyzed. Artificial intelligence tools help firms speed up due diligence, spot risks earlier, and process large volumes of data more accurately. This leads to faster deal flow, more efficient screening, and smarter investment decisions.
• ESG integration—focusing on environmental, social and governance factors—is becoming a must-have. Increasingly, investors expect private equity firms to embed ESG criteria throughout the investment process, from assessing sustainability and diversity to governance standards. Fund managers are building structured frameworks to meet these expectations and drive long-term value.
• Mid-market specialization is gaining momentum. The mid-market segment remains fragmented and less competitive than large-cap buyouts, opening doors for funds to focus on specific sectors, regions, or operational strategies. These targeted approaches can deliver differentiated returns through hands-on value creation in overlooked areas.

Challenges to Watch

Despite innovation, private equity faces several ongoing challenges:

• Valuation uncertainty remains a concern, especially in volatile markets. Pricing private companies accurately is critical for fundraising success and timing profitable exits.
• Rising regulatory scrutiny is increasing demands for transparency, reporting and fee disclosures, often across different countries and legal frameworks.
• Intensifying competition in secondaries and growth equity pushes up valuations. With more investors chasing fewer quality deals, firms must balance speed and discipline to avoid overpaying.

The content in this article is provided for educational purposes only. It does not constitute investment advice, financial recommendations, or promotional material.