Exits are harder, deals more cautious - but opportunities still shine

After years of easy money, private equity is facing a reality check: the deal-making playbook is being rewritten. Fundraising has slowed, deal-making is more cautious and selling assets has become a headache.

But for Gabriel Ng, Managing Director at Neuberger Berman, these conditions are also giving rise to new opportunities.

“It’s been a challenging couple of years, but amidst a more difficult environment, we’re still seeing good opportunities amongst the dislocation.”

Ng is understandably upbeat, given Neuberger Berman has bucked the market trend over the last few years and has seen an uptick in deal flow over the last few years. 

From the rise of GP-led secondaries to a new evergreen fund for Australian investors, watch the full interview above to find out more about how Ng sees the landscape today. 

Please note, this interview was filmed 31st July, 2025.

Fundraising splits the market

The glory days of 2021 fundraising are long gone. “Managers are taking a longer time to raise funds, and many of them have unfortunately not been able to reach their targeted fund sizes,” says Ng.

But it’s not a collapse across the board. Ng points out that proven managers are still able to raise money, while newer entrants are the ones struggling to gain traction. 

“A lot of the established, proven GPs have managed to raise their funds successfully, but some of the more emerging GPs have found it difficult.”

“We continue to back GPs that we’ve been partners with for a very long time, who have been proven in their respective strategies and markets.”

Ng also points to the growing role of funded primaries - that is, funds that are already deploying capital when they come to market, giving investors a clearer line of sight into portfolios.

Playing defence in deal-making

While capital raising is harder, deal-making has not dried up. After a slow start, activity picked up in the second half of 2024 and carried into early 2025 before tariff concerns created fresh volatility. For high-quality companies, it's business as usual. 

“High-quality companies continue to trade. They continue to transact,” Ng says.

Still, managers are approaching deals with greater caution and stricter underwriting standards.

The sweet spot right now is in industries that are less rattled by tariffs and global uncertainty. “Private equity as an asset class generally has greater exposure to service-type businesses vis-à-vis public markets… which might see less of that first-order impact from tariffs," says Ng.

Healthcare, education, business services, and technology are among the sectors continuing to attract investment. Ng describes these as industries with more predictable demand, even in uncertain times.

Back to basics

The days of returns being driven by low-cost leverage are gone. Rising interest rates have forced private equity to rethink how returns are generated.

“The dependence on low-cost financial leverage, as well as multiple expansion, features a lot less in our underwriting today.” Instead, Ng says the focus is back on the fundamentals: growing revenue, expanding profit margins, and making strategic bolt-on acquisitions.

“We haven’t changed our return targets, but how we get there is a little different from how we might have got there in the last 10 to 12 years in a low-rates environment.”

This back-to-basics approach, he argues, should prove more durable in a world where financing costs are unlikely to return to their previous lows anytime soon.

No easy way out - the exit problem

If raising money is hard, getting it back has been even harder. IPO markets remain subdued, and strategic buyers are cautious. Ng explains: 

“Private equity exits as a percentage of private equity NAVs are tracking below the long-term average. So indeed, distributions have been challenged.”

Managers are now holding onto assets longer, with more than half of portfolio companies kept for four years or more.

In a challenging exit environment, GPs have started to explore other solutions to drive distributions. One popular option is partial recaps - that is, selling small stakes in portfolio companies to free up some cash.

Another is fund-to-fund deals, where a manager moves a "crown jewel asset" from one fund to another so it can keep compounding while still giving existing investors an exit. 

“We see ample opportunities on the co-investment side, which is why our deal flow has moved in the opposite direction to the market," says Ng. "We’ve actually seen an uptick over the last few years.”

The boom in secondaries

The liquidity squeeze has propelled the secondary market to record levels. 

In 2024, global secondary transaction volume exceeded US$150 billion, with GP-led deals accounting for roughly half.

These deals let managers keep their best companies for longer while still giving liquidity to existing investors. But Ng says quality is everything:

“The underlying assets have to be market-leading, defensive, profitable, high-quality companies that we like to continue to get exposure to.”

Equally important, he says, is ensuring GPs share risk. Neuberger Berman prefers to take the lead on such transactions, setting terms and ensuring managers keep “skin in the game” through reinvested profits and aligned fees.

“Skin in the game is very important. We want to set the terms, the pricing, the structure.”

This includes evaluating how much of the manager’s profits are being reinvested and how continuation fund fees and incentives are structured.

Main character energy

With US$140 billion in private markets, Neuberger Berman is betting its size and scope will keep it standing out in a crowded field.

“We’re not just a pure-play secondary investor. We have a large primary program that continues to back GPs across the world.”

That ecosystem spans primaries, co-investments, and secondaries, allowing it to maintain long-term partnerships, Ng says, which is crucial. “There’s that longevity in the relationship. We can continually partner with the GP beyond the transaction.”

A way in for Australian investors

In Australia, Neuberger Berman is preparing to launch an evergreen, semi-liquid private equity fund designed for retail investors, a group traditionally locked out of the asset class.

Traditionally, private equity has been the preserve of institutions. High minimums, long lock-ups, and complex structures kept most individuals out. Ng says this new fund is designed to change that.

“First and foremost, we’re looking for a structure that mitigates a lot of the restrictions or constraints that have prevented individual investors from accessing the private equity asset class.”

The fund will focus on direct co-investments with top managers, backed by select GP-led secondaries. With monthly subscriptions and redemptions and a single capital call, the fund is designed to make private equity more accessible, without diluting the quality of exposure.