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Why Invest in Private Equity?

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Morgan Stanley North America Private Credit
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Private Equity & Venture Capital

The Private Equity and Venture Capital session discusses how the broad universe of PE and VC backed companies expand the investible universe beyond publicly traded companies. Learning Objectives:

  • Define the lifecycle of a private company and the investors who finance its growth at each stage
  • Highlight key performance analysis for PE and VC funds, including internal rate of return (IRR), public market equivalent (PME), and multiple of invested capital (MOIC) metrics
  • Discuss the liquidity implications of PE and VC investing, including committed capital, dry powder, capital calls, and exits
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Private equity is one of the main ways investors gain exposure to privately held companies. It has historically delivered better long-term risk-adjusted returns than public equity1, achieving this primarily by making operational improvements across portfolio companies, with the aim of growing revenues and expanding margins.

The path to growth within private equity is primarily driven by three factors: 

  • An Expanded Opportunity Set – A wider set of investible companies than is available in public markets.
  • A More Efficient Equity Exposure – Returns driven by company-level fundamentals, proprietary informational advantages and control of value creation.
  • A Long-Term Growth Perspective – Private equity is designed to capitalize on long-term changes to strategies, operations, capital allocations and management.
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1 Source: Pitchbook Capital Indexes Dataset as of December 31, 2025. Public Equity is represented by the MSCI ACWI Index. All returns are net of fees.