For decades, private equity was the gold standard—outperforming public markets and building massive wealth. But something quietly broke. Today, the biggest funds are underperforming, capital is getting stuck, and the old playbook isn’t working anymore.
In this episode, we break down exactly why that shift happened—and more importantly, where the real returns have moved. From understanding simple concepts like EBITDA and entry multiples to uncovering why small, “boring” businesses are now outperforming billion-dollar deals, this episode reframes how smart investors should think about private markets going forward.
TAKEAWAYS
- 66% of private equity returns came from cheap debt and rising prices—not operational improvement
- The price you pay upfront is the single biggest driver of your returns
- Small and mid-sized deals are outperforming large funds due to less competition and better pricing
- Independent sponsors create stronger alignment by only getting paid when deals succeed
- Diversification and disciplined selection are critical in an inefficient market with wide outcome dispersion
FOLLOWS
Oak IQ Investments → https://www.instagram.com/oakiq/
Own The Exit → https://www.instagram.com/owntheexit/
Caleb Investing → https://www.instagram.com/calebinvesting/
CHAPTERS
00:00 The 66% Private Equity Reality
01:31 Why Private Equity Feels Confusing
05:06 Why Big Private Equity Started Failing
07:56 The Cash Flow Crisis (DPI Problem)
09:04 Where the Returns Actually Moved
12:28 The Rise of Independent Sponsors
19:49 Deleveraging & Real Cash Flow
25:30 The New Playbook for Smarter Investing
KEYWORDS
private equity strategy, passive investing strategies, small business acquisitions, independent sponsors, lower middle market investing, EBITDA explained, entry multiple investing, cash flow investing, leveraged buyouts, alternative investments, portfolio diversification, wealth building strategies, passive income ideas, deal sourcing, investment risk management, buy and hold business, private markets investing, financial freedom strategies, compound growth investing, disciplined investing, investment fundamentals
EPISODE 155
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