Merrick McKay (Abrdn): “It’s always a good time to invest in Private Equity” Part 1

The discussion highlights a fundamental principle of private equity: market timing is largely ineffective, if not impossible. Unlike public markets, where investors can attempt to optimize their entry and exit points, private equity relies on long-term commitments, with managers determining the pace of investment and divestment. Thus, for an investor, it is always appropriate to invest, provided a disciplined approach is adopted. The key lies in building a phased investment program based on regular commitments to high-quality funds. This strategy helps smooth out economic cycles and avoid the mistakes associated with attempting to time the market. Historically, the best years for private equity have often been those in which investments were made during periods of crisis or economic slowdown. During these phases, valuations are more attractive, and managers can acquire assets on more favorable terms, which enhances long-term performance potential. In the current context, marked by rising interest rates and a correction in valuations, the investment environment is considered more favorable than it was a few years ago. On the other hand, exit conditions remain more complex, which slows down divestments but does not affect managers’ ability to invest. Finally, complementary strategies such as co-investment or the secondary market can be used tactically, but they do not replace the importance of a structured and regular primary program.