Private Equity Is Reinventing Itself. Again.

What's New

Clearlake Capital Co-Founder José Feliciano and Goldman Sachs Global Co-Head of Capital Solutions Mahesh Saireddy sat down at Bloomberg Invest 2026 to examine the evolving structure of private markets liquidity, the reinvention of the private equity model under AI pressure, and the growing sophistication of structured capital solutions. Feliciano, whose firm is marking its 20th year, argued that private equity has always reinvented itself every decade and that the current period, while challenging, is creating a target-rich environment for operators who understand how AI disrupts software at a company-specific rather than sector-wide level.

Why It Matters

The private equity industry is simultaneously navigating a difficult exit environment, AI-driven valuation uncertainty across software portfolios, rising retail demand that is stress-testing liquidity structures, and a wave of financial product innovation in NAV loans, rated feeders, and CLOs designed to bridge capital structure gaps. The firms that navigate this convergence by maintaining underwriting discipline, building operational expertise, and expanding their capital solutions toolkit will define the next decade of the asset class.

Big Picture Drivers

• Software bifurcation: Not all software is equally vulnerable to AI disruption. Mission-critical, vertically integrated, or deeply embedded software businesses have defensible customer relationships. Undifferentiated tools sitting on top of third-party data are acutely exposed.

• Exit realism: The IPO market is a fraction of 2021 levels, continuation vehicles are a legitimate but deal-specific exit tool, and the buyers willing to pay the highest multiple at any given time define the right path out, whether strategic, sponsor, or secondary-led.

• Structured capital growth: NAV loans, rated feeders, and CLOs are not temporary patches. They are maturing instruments that give insurance companies, banks, and institutional allocators new and better-suited ways to access private markets exposure.

• Retail access nuance: Feliciano argued that some private markets products are genuinely well-suited for retail investors, particularly credit, secondaries, and infrastructure, while pure-play private equity requires more careful packaging and much more explicit liquidity communication.

• Industry consolidation: The differentiation between public and private markets continues to compress from both sides, with liquid fixed income managers acquiring private market capabilities and private equity sponsors building multi-product platforms to serve the full capital structure.

By The Numbers

• 43 firms built by Stable since 2006 (referenced context; Clearlake is marking its 20th year in 2026)

• $3.8 to $4T in private equity assets sitting in funds for approximately six to seven years, creating significant exit pressure

• 30,000+ portfolio companies globally needing exits in the current cycle

• ~200B IPO market size expected in 2026, a fraction of the $400B+ raised in 2021

• 5% quarterly redemption cap on BDC structures, described as a feature protecting orderly liquidation rather than a bug

Key Trends to Watch

• AI underwriting complexity will persist for 12 to 24 months as the market struggles to distinguish which software companies will adapt, which will be replaced, and which sit in a defensible middle ground with changing but durable growth profiles.

• Structured capital instruments including NAV loans, rated feeders, and CLOs will continue expanding as insurance company allocations to private markets grow, driving demand for investment-grade-structured exposure to alternative assets.

• Secondary market volume is growing dramatically as a proportion of total private equity commitments traded, moving from a niche tool to a core portfolio management mechanism for both GPs and LPs.

• Retail private markets education will determine whether the current BDC stress episode becomes a temporary confidence issue or a longer-term structural setback for the democratization trend.

Memorable Quotes

• "The capital markets are more of a spectrum, a continuum, rather than this strong delineation between equity and credit." Feliciano articulating the founding premise of Clearlake. The firm was built on the idea that solving for clients across the capital structure was more durable than being purely a buyout shop. Twenty years later, the rest of the industry is arriving at the same conclusion.

• "The preferred way of exiting for us is whoever pays the highest multiple, whatever can raise the highest return to our investors." A deliberately unsentimental take on continuation vehicles, IPOs, and strategic sales. Feliciano refuses to privilege any exit route. The only measure is price.

• "The 5% cap is a feature, not a bug. What it ensures is that there is an orderly liquidation that actually gets that premium that you paid for captured." Saireddy on BDC redemption limits. The argument is that if private credit were redeemable daily, it would simply be public credit. The illiquidity is inseparable from the premium. Confusing the two destroys the value proposition for everyone.

• "Today you can go from a team of 20 people developing a product over 6 to 12 months to a team of five people over two weeks. That's dramatic." Feliciano on AI's impact on software development velocity. The implication is not that software is dying but that the competitive moat narrows fast for anything without genuine customer lock-in or data advantage.

The Wrap

Private equity has survived rate cycles, financial crises, and multiple waves of disruptive technology by doing what Feliciano describes: buying companies, making them better, and finding the highest-value exit available. AI changes the underwriting complexity and raises the bar for operational transformation, but it does not change the fundamental value creation logic. The firms that understand software disruption at the company level rather than the sector level, that have the patience to hold through the current dislocation, and that have built multi-product capital structure capabilities will be well positioned for the next decade of private markets.