Apollo Says PE's Easy Money Era Is Over

What's New

David Sambur, Matt Nord, and Antoine Munfakh, Apollo's co-heads of private equity, make the case in their January 2026 report Private Equity Returns to Its Roots that the asset class must abandon the leverage and multiple expansion playbook that dominated 2010 to 2022 and return to disciplined buying, hands on operational improvement, and flexible exit strategies to generate alpha in a normalized rate environment.

Why It Matters

Since 2018, capital calls have exceeded distributions by roughly $1.5 trillion, exits remain depressed, and fund lives are stretching well beyond expected 10 year terms. The dispersion between top and bottom quartile PE funds now exceeds 25 percentage points, signaling that the rising tide no longer lifts all boats and that manager selection has become the single most consequential decision for allocators.

Big Picture Drivers

• Structural market shift: Public equity markets have halved their listed company count from ~8,090 in 1996 to ~3,940 today, while passive flows have pulled $4 trillion in cumulative inflows versus $2.9 trillion in active outflows since 2012

• Rate regime reset: Higher financing costs since 2022 have exposed managers who relied on cheap debt and multiple expansion rather than genuine operational value creation

• Exit gridlock: Volumes remain well below five year averages, and even if activity normalizes, the massive backlog means distribution yields as a percentage of assets held are unlikely to recover soon

• Beta dependency exposed: From 2010 to 2021, approximately 66% of buyout value creation came from leverage and multiple expansion, factors beyond a manager's control

• Concentration risk: The top 10 S&P 500 stocks now represent 40% of the benchmark's market cap, a historic high that distorts price discovery

By The Numbers

• $1.5T: Capital calls exceeding distributions since 2018 across the PE industry

• 66%: Share of buyout value creation attributable to leverage and multiple expansion from 2010 to 2021

• 25+ ppts: Performance dispersion between top and bottom quartile PE funds

• 2.5x: Proceeds advantage that the cheapest entry multiple deals generated over the most expensive deals in the 2020 to 2022 vintage

Key Trends to Watch

• Purchase discipline as alpha: Apollo's data shows deals entered at the lowest EV/EBITDA quartile generated 2.5 times more exit proceeds than the highest quartile in 2020 to 2022 vintages, making entry price the dominant return driver again

• Operational value creation mandates: Leading managers are deploying dedicated operating teams and detailed value creation plans from day one rather than relying on financial engineering

• Multi channel liquidity strategies: Firms generating strong DPI are underwriting multiple exit paths upfront, including minority sales, dividends, sale leasebacks, and creative recapitalizations

• Carve out resurgence: Complex, bilateral, and off cycle deal sourcing, including corporate carve outs, is returning as the preferred origination strategy for managers seeking limited competition

The Wrap

Apollo's thesis is clear: the next decade of PE outperformance will belong to managers who treat value creation as a repeatable operational system rather than a byproduct of favorable market conditions. For allocators, the implication is that underwriting a GP's operational capabilities, sourcing discipline, and exit flexibility matters far more than backing brand names that rode the easy money wave.