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Two and Twenty: How the Masters of Private Equity Always Win
The first true insider’s account of private equity, revealing what it takes to thrive among the world’s hungriest dealmakers
Private equity was once an investment niche. Today, the wealth controlled by its leading firms surpasses the GDP of some nations. Private equity has overtaken investment banking—and well-known names like Goldman Sachs and Morgan Stanley—as the premier destination for ambitious financial talent, as well as the investment dollars of some of the world’s largest pension funds, sovereign wealth funds, and endowments. At the industry’s pinnacle are the firms’ partners, happy to earn “two and twenty”—that is, a flat yearly fee of 2 percent of a fund’s capital, on top of 20 percent of the investment spoils.
Private equity has succeeded in near-stealth—until now. In Two and Twenty, Sachin Khajuria, a former partner at Apollo, gives readers an unprecedented view inside this opaque global economic engine, which plays a vital role underpinning our retirement systems. From illuminating the rituals of firms’ all-powerful investment committees to exploring key precepts (“think like a principal, not an advisor”), Khajuria brings the traits, culture, and temperament of the industry’s leading practitioners to life through a series of vivid and unvarnished deal sketches.
Two and Twenty is an unflinching examination of the mindset that drives the world’s most aggressive financial animals to consistently deliver market-beating returns.
Private equity was once an investment niche. Today, the wealth controlled by its leading firms surpasses the GDP of some nations. Private equity has overtaken investment banking—and well-known names like Goldman Sachs and Morgan Stanley—as the premier destination for ambitious financial talent, as well as the investment dollars of some of the world’s largest pension funds, sovereign wealth funds, and endowments. At the industry’s pinnacle are the firms’ partners, happy to earn “two and twenty”—that is, a flat yearly fee of 2 percent of a fund’s capital, on top of 20 percent of the investment spoils.
Private equity has succeeded in near-stealth—until now. In Two and Twenty, Sachin Khajuria, a former partner at Apollo, gives readers an unprecedented view inside this opaque global economic engine, which plays a vital role underpinning our retirement systems. From illuminating the rituals of firms’ all-powerful investment committees to exploring key precepts (“think like a principal, not an advisor”), Khajuria brings the traits, culture, and temperament of the industry’s leading practitioners to life through a series of vivid and unvarnished deal sketches.
Two and Twenty is an unflinching examination of the mindset that drives the world’s most aggressive financial animals to consistently deliver market-beating returns.
272 pages, Hardcover
Published June 14, 2022
136 people are currently reading
1857 people want to read
About the author
Sachin Khajuria
2 books9 followersSachin Khajuria is a former partner at Apollo, one of the world's largest alternative asset management firms, and is also an investor in funds managed by Blackstone and Carlyle, among other investment firms. He has twenty-five years of investment and finance experience. Sachin holds two degrees in economics from the University of Cambridge. He divides his time between New York, Switzerland, and London.
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Displaying 1 - 30 of 38 reviews
March 25, 2024
Maybe it’s my own fault I found Two and Twenty disappointing; looking back at book jacket makes me realize that perhaps I should have had more of an inkling that Khajuria’s book would essentially function as an unabashed cheerleader for private equity.
But … come on. While I don’t think reading this was a waste of my time, the book didn’t even make an attempt at providing a balanced picture. I was looking for a read that neither demonized nor lionized the PE industry. This book only lionizes; it’s pretty much the opposite of a balanced take.
I’m not sure who the intended audience is for this book - maybe individual investors Khajuria hopes will lobby their elected representatives to enact legislation permitting “mom and pop” participation in PE funds? Whatever the case, his audience apparently isn’t someone like me who wants to find out more about the industry but doesn’t appreciate the “we’re so smart it hurts, we never make mistakes, and oh, we’re also serving a socially beneficial purpose” take.
I also found the book’s format odd; almost every chapter is a self-contained sketch of a particular PE scenario - Khajuria explains that the sketches are fictional, but then he tries to use those scenarios, and their unfailing “wins” - to buttress his argument that private equity is a beneficial god to which we peons should genuflect. There are also periodic strange turns of phrase; he could have used a good editor.
I didn’t hate Two and Twenty, and I learned something from it, but primarily it felt like a missed opportunity. Khajuria could have provided a much deeper, more thoughtful, and much more balanced perspective of private equity.
Two and a half stars rounded down to two.
But … come on. While I don’t think reading this was a waste of my time, the book didn’t even make an attempt at providing a balanced picture. I was looking for a read that neither demonized nor lionized the PE industry. This book only lionizes; it’s pretty much the opposite of a balanced take.
I’m not sure who the intended audience is for this book - maybe individual investors Khajuria hopes will lobby their elected representatives to enact legislation permitting “mom and pop” participation in PE funds? Whatever the case, his audience apparently isn’t someone like me who wants to find out more about the industry but doesn’t appreciate the “we’re so smart it hurts, we never make mistakes, and oh, we’re also serving a socially beneficial purpose” take.
I also found the book’s format odd; almost every chapter is a self-contained sketch of a particular PE scenario - Khajuria explains that the sketches are fictional, but then he tries to use those scenarios, and their unfailing “wins” - to buttress his argument that private equity is a beneficial god to which we peons should genuflect. There are also periodic strange turns of phrase; he could have used a good editor.
I didn’t hate Two and Twenty, and I learned something from it, but primarily it felt like a missed opportunity. Khajuria could have provided a much deeper, more thoughtful, and much more balanced perspective of private equity.
Two and a half stars rounded down to two.
April 17, 2023
Two and Twenty is not a recipe for blackbird pie, it is the fee structure for private equity managers - 2% of assets every year and 20% of any profits. Far higher than "passive" investments like mutual funds and ETFs. No wonder the partners are often worth in excess of $100 million!
Remember the classic novel "Bonfire of the Vanities?" where the central protagonist, a bond trader, thinks of himself as a "master of the universe"? Well, you are in for a big dose of that as the author cheerleads the industry as the best, brightest, most knowledgeable folks around, able to leap tall buildings in a single bound, etc. Surprised he didn't break an arm patting himself on the back!
The book is an advertising pitch that all pension plans (for our benefit, of course) should be allowed to invest in the funds, not just the accredited investors who could supposedly withstand the loss if things go wrong. The writer claims the "fictionalized" firm in the examples given produces outsize gains of over 30% per year even after the 2-20 split 90% of the time. Really? As I got into the book I started looking for related stories. March 21, 2023 Headline "Pension Funds retreat on Private Equity, story indicates pension plans are pulling back after aggressively pursuing "the expensive, risky and hard-to-trade asset class." "Without private equity, you don't have to deal with the costs, the fees, the administrative headache and the reporting headache associated with it."
In April, the headline read "Private Equity's Food Binge Goes Sour" reviews the fact that "the funds had snapped up a record 786 makers of food and beverages worth $32 billion using bundles of debt to pay for the purchases. They then got hammered with higher labor costs, supply chain disruptions and surging inflation which reduced the cash flow necessary to cover the heavy debt loads." The author of the book makes the argument that their "library" of facts and circumstances permits the fund to see any potential issue so they can make corrections to fix it on a risk-adjusted basis. (Another buzz phrase, book is loaded with "business babble" I haven't encountered since my MBA studies.) What, no room in the library for pandemic?
Other news stories relate to how "Venture Capital faces Many Unknowns after Silicon Valley Bank's Fall. What, nothing in the private equity library about the effect rising interest rates have on bonds used as collateral? Like you may have to sell them for less than book value?
How about "Macro Funds Suffer Losses", 20% for the month of February 20223 ...
Anyway, the author seems to think equity fund managers can walk on water and do no wrong, not what I think most readers are looking for. In addition, for all the talk about the math, none is included which makes it hard to judge the process. The text is repetitive and generic through the use of fictionalized firms and acquisition targets.
Save your money!
Remember the classic novel "Bonfire of the Vanities?" where the central protagonist, a bond trader, thinks of himself as a "master of the universe"? Well, you are in for a big dose of that as the author cheerleads the industry as the best, brightest, most knowledgeable folks around, able to leap tall buildings in a single bound, etc. Surprised he didn't break an arm patting himself on the back!
The book is an advertising pitch that all pension plans (for our benefit, of course) should be allowed to invest in the funds, not just the accredited investors who could supposedly withstand the loss if things go wrong. The writer claims the "fictionalized" firm in the examples given produces outsize gains of over 30% per year even after the 2-20 split 90% of the time. Really? As I got into the book I started looking for related stories. March 21, 2023 Headline "Pension Funds retreat on Private Equity, story indicates pension plans are pulling back after aggressively pursuing "the expensive, risky and hard-to-trade asset class." "Without private equity, you don't have to deal with the costs, the fees, the administrative headache and the reporting headache associated with it."
In April, the headline read "Private Equity's Food Binge Goes Sour" reviews the fact that "the funds had snapped up a record 786 makers of food and beverages worth $32 billion using bundles of debt to pay for the purchases. They then got hammered with higher labor costs, supply chain disruptions and surging inflation which reduced the cash flow necessary to cover the heavy debt loads." The author of the book makes the argument that their "library" of facts and circumstances permits the fund to see any potential issue so they can make corrections to fix it on a risk-adjusted basis. (Another buzz phrase, book is loaded with "business babble" I haven't encountered since my MBA studies.) What, no room in the library for pandemic?
Other news stories relate to how "Venture Capital faces Many Unknowns after Silicon Valley Bank's Fall. What, nothing in the private equity library about the effect rising interest rates have on bonds used as collateral? Like you may have to sell them for less than book value?
How about "Macro Funds Suffer Losses", 20% for the month of February 20223 ...
Anyway, the author seems to think equity fund managers can walk on water and do no wrong, not what I think most readers are looking for. In addition, for all the talk about the math, none is included which makes it hard to judge the process. The text is repetitive and generic through the use of fictionalized firms and acquisition targets.
Save your money!
December 14, 2022
Not sure the grandiose characterisation of PE works when told by “sketches” involving semi-fictional scenarios. These sketches are fairly unsubstantiated (fewer facts than a case interview, and a lot of hyperbole) and so appeal to the credulity of the reader being wowed by the descriptions of super-smart men(!) who finger stacks of spreadsheets under the supervision of “The Founder”. I suppose it serves as an easy to read refresher for some of the principles PE Firms purportedly apply, although there’s not much to go on here for someone looking for an insider perspective and the tone is quite breathless. Bonus points for comedy when alluding to an educational publisher deal where the interests of students were considered.
December 28, 2022
Two and Twenty (2022) provides an up-close-and-personal account of the mysterious world of private equity. It gives insights into this unique branch of the finance sector and explains what sets it apart from other investment models.
Sachin Khajuria is a former partner at Apollo, one of the world’s largest alternative asset management firms, and is also an investor in funds managed by Blackstone and Carlyle, among other investment firms. He has twenty-five years of investment and finance experience. Sachin holds two degrees in economics from the University of Cambridge. He divides his time between New York, Switzerland, and London.
---
A backstage pass to the world of private equity.
We all love rags-to-riches tales. They inspire fantasies not just of plenty, but of hope. If someone else can turn nothing into abundance, perhaps we can too.
Yet the bulk of us sour when the rich become richer. We hear about founders and partners jetting about in private planes and earning salaries in the hundreds of millions – all by leveraging investments that aren’t their own – and it just doesn’t seem fair. In fact, it feels undeserved and selfish. It’s attitudes like these that have given private equity a bad rap.
But on what basis are these hard feelings being formed? And are they justified? Because when it comes to private equity, most people don’t actually know what goes on behind the scenes – or what it really takes to be successful in the field. And curiously, most of us don’t even realize just how tied to private equity we already are, whether or not we have investments.
This book by Sachin Khajuria, Two and Twenty is your backstage pass into the world of private equity. Find out what it is, how it works, and what it takes to succeed in this specialized, secretive financial field.
---
Private equity is extreme asset flipping.
You’ve probably seen those real estate “flip” shows on TV – the ones where an aesthetically pleasing couple buy a run-down property in an up-and-coming suburb. Over the course of an hour, you watch them demolish a wall here, build a deck there, and encounter a few hiccups like bad weather or unexpected costs. As the episode nears its end, you’re given a virtual tour of a slick new property, complete with designer furnishings and impressive landscaping. Then the auction begins. The house sells for a huge profit, and the couple is flush with cash, ready to seek out their next project.
In a way, private equity is the same – only the stakes are much, much higher. And, of course, instead of playing with a few hundred thousand dollars, you’re flipping assets worth millions.
So, what exactly is private equity?
In simple terms, private equity is a type of financial investment, in the same way that buying shares or putting savings in a high-interest account are types of investments. People use private equity to turn the money they have into even more money.
Sounds great, right? Especially if you’re someone who doesn’t have a regular paycheck, like a retiree. You want the money you have to support you for as long as possible, by multiplying as much as possible.
But one thing that distinguishes private equity from other types of financial investments is risk. First, you need a huge chunk of money to play this game – much more than if you were just buying a few shares independently. Why? Well, private equity typically involves flipping entire companies. These companies are usually in a state of crisis: they’re facing bankruptcy, or they’ve lost the bulk of their customers to competitors, or they’ve failed to modernize and can’t deliver anymore.
You might be wondering why anyone would invest in a company like that. The reason is potential. A private equity firm is one that makes investments on behalf of other organizations who represent individuals – like pension funds. The firm will see the ailing company as an opportunity. Its dire circumstances will make it cheap to purchase, and the firm will have an expert team who can guide it back to health – like those house-flippers who turn a dump into a palace. But even more than that, the team will transform the company into a business opportunity that the market salivates over. At the right moment, the firm will sell and walk away with double or triple what they paid. They win, the company wins, and, most importantly, the private investors that the firm represents win.
So, why is this risky?
Well, again, you need a lot of money in the pot to not only purchase an ailing company, but nurture it back to health over several years. That money, don’t forget, often belongs to retirees living on a fixed income. And unlike the stock exchange, where you can buy or sell at any time, investors can’t withdraw their money from a private equity investment scheme for an agreed period of time. This timeframe will be years – long enough to get the ailing company back on its feet. Finally, there’s always the risk that the flipped company won’t become profitable and gain a high purchase price, in which case the investment might only break even – or worse, it could sell for a loss. So, while private equity reaps investors high returns when it’s a success, when it fails, it fails dramatically.
But it’s the promise of those high rewards – and maybe even the adrenaline rush of those high stakes – that make private equity so tempting for investors and professionals alike.
---
Private equity is the hottest gig in town.
There’s a lot of buzz around private equity, and most of it has to do with money. Let’s look at some figures so you can appreciate why.
In the past decade, private equity has doubled to become a $12 trillion industry. Yep – that’s right. Not million, not billion – trillion. And in the decade ahead, it’s likely to double again.
Private equity is happening across the globe, embedded in our daily lives without us even knowing. You’re not going to know if a private equity firm is flipping the dating app you’re using, or has just bought the supermarket chain you shop at, or is using your pension fund to purchase a media services company with the goal of doubling your investment in a few years.
Demand for private equity has made dozens of firms spring up, but twelve major firms sit at the apex of the industry – including Blackstone, which manages around $875 billion in assets. That’s a lot of money . . . and a lot of responsibility to make the right calls for investors.
Now that you’re aware of the scale of money that’s at play, let’s look into another aspect of this industry that adds to its allure – its payment model.
Partners at private equity firms – the professionals making the big calls on which companies to invest in and when major deals should be made – are paid on the basis of “two and twenty.” They charge clients an annual fee of 2 percent of the capital invested, plus 20 percent of any profits. This money is divided among the team at the firm, meaning that everyone’s income and wealth is tied to the firm’s performance. A win for investors means a win for everyone.
Now, 2 percent might not sound like much, but don’t forget what kind of figures we’re talking about here. Two percent of $875 billion is more money than most of us will see in a lifetime. That’s what automatically gets paid to each firm annually. And 20 percent of profits – well, this is why senior partners in private equity are worth $100 million by the time they hit their forties.
With firms managing assets worth such staggering amounts, you might think that they have huge teams, which would dilute how much ends up in everyone’s bank account. But surprisingly, the opposite is true – and it has nothing to do with greed.
---
Private equity firms are worlds away from Wall Street.
Let’s take a quick tour through a typical private equity firm so you can get a sense of how they operate.
A career in private equity isn’t mainstream – it’s elite – and everything about it reflects this. We’ll dig a bit deeper into what makes it so elite soon, but let’s just focus on the basics for now.
The firm you’re visiting will likely have an exclusive address. If you’re in Manhattan, you won’t find it near Wall Street. You’ll need to travel north. In fact, you’ll probably find yourself on a street that flanks Central Park, where the firm’s boardroom enjoys the best views in town.
When you arrive, you’ll encounter heavy security. Confidentiality is nonnegotiable in private equity. If a rival firm gets tipped off about your business strategies, they’ll potentially try to buy the companies you have your eye on before you do, either stealing them from under your nose or bumping up that initial price tag by bidding against you. And that’s going to negatively impact your whole plan. Remember, it’s all about buying low and selling high.
Once you’re ushered into the office space, you’ll find yourself in a quiet, highly focused environment. The furnishing will speak of quality and functionality, and the massive kitchen will catch your eye. You’ll notice it’s fully stocked with an array of nutritious options and a top-notch coffee machine, so you don’t need to duck out for sustenance while you work.
The founder will have the largest office, but you likely won’t catch a glimpse inside. They’ll be busy having face-to-face discussions with the firm’s partners. This is standard practice rather than phone calls or emails – again, it’s all about confidentiality.
There might be about 20 or so partners in the firm, and their doors will be open to encourage transparency and collaboration. You’ll even hear a few talking to each other in a candid, serious way.
Each partner has a deal team that sits in nearby cubicles. The deal team’s job is to research every tiny detail about a company’s financial health and feed this information forward to the partner, who’ll then pitch the proposed deal to the founder. Collectively, the deal team is made up of four professionals, each with a different level of experience: an analyst, a mid-level associate, a junior partner, and a senior counsel. This team is responsible for strategizing deals and business plans worth billions. Keeping the team tight and lean means everyone gets a bigger chunk of the profits – but more importantly, it makes the team agile. Informed, quick decisions are what counts, and being close-knit makes that possible.
This small team structure means that every member has a huge amount of responsibility. There’s no one to step in or bail you out if you make a mistake that might cost you billions. That’s partly why a career in private equity is only for the select few.
---
Only the elite become private equity masters.
Let’s use a fictional sketch to explore what it takes to be successful in the world of private equity.
Let’s say you’ve just landed a job as an associate in a top-tier firm. First – congratulations! You’ve just come to the end of a 12-month interview process, which has included two months of secret meetings with 20 different senior investment partners who’ve drilled you in every aspect of the industry. And you’ve been doing this while holding down a job as a financial analyst at Goldman Sachs – which you landed two years ago after graduating at the top of your class at Wharton. The punishing hours you’ve been putting in are just a taste of your new career path. It’ll demand that you work until midnight most nights – lucky there’s that well-stocked kitchen in your office – and you’ll typically work most weekends too. Good thing you’re ambitious and hardworking. You’re going to need to keep your eye on the prize.
Your new boss – a senior partner at the firm – throws you straight into your role. She has her eye on a supermarket chain called Foodmart. A family business, Foodmart has been selling groceries and staples at affordable prices in middle-class cities across the US for decades. But they failed to modernize. And when the Covid pandemic hit, they couldn’t compete with online stores offering home delivery.
Your first task will be research. You’ll need to report on every aspect of the business – its financial state, assets, liabilities, opportunities, management team, inventory, supply chains, marketing . . . everything. You’ll do the same for its competitors, until you know the whole sector intimately. But this is your jam. You love working with data, and you revel in complexity. When you’re finished, you’ll have produced reports hundreds of pages long. Your deal team will use them to develop a strategy – a business plan of how to flip Foodmart from bankruptcy to a market leader.
This is where the fun begins – interrogating all the potential options that might transform Foodmart, and running analyses of how these different options would play out financially. After all, your objective is to make profit, so your team needs to be confident in its decisions. You and your team will play devil’s advocate, picking apart each other’s business proposals and looking for weaknesses or blind spots. You’ll unearth every hole in your plan through rigorous cross-examination. This is also exactly what the senior partners and founder will do when your boss pitches her proposal to buy Foodmart to them – so it’s crucial that she’s thoroughly prepared.
It seems like your methodical, analytical approach has paid off – along with all those late nights. The founder gives your team the thumbs-up, and your boss negotiates the deal. Now, the real work starts. You spend the next 18 months working hard to transition an outdated grocery chain into an upscale, service-focused brand called Farmfresh. This means restructuring management, redesigning infrastructure, and repositioning the company in the niche market of fresh, organic produce.
Customers love the new membership scheme and the advice provided by in-store specialists. The free food-tastings add a sense of quality to the experience as well. Two years after the initial deal, stocks have risen by 30 percent and the firm has tripled the investment they’ve made. Your boss negotiates the company’s sale for a 300 percent profit, and you find yourself in line for a very respectful bonus. It amazes you that a team of just four people has pulled off such a feat. In your opinion, this – along with years of working 18-hour days, seven days a week – justifies the wealth-inducing “two and twenty” payment model.
---
When it comes to private equity, losing isn’t an option. Profits aside, protecting a client’s investment is paramount – not just for the sake of a firm’s own success and reputation, but because millions of pensioners are relying on that investment to support themselves. Your clients are paying a premium price for your services. So if you can’t promise them success, they should take their investments elsewhere.
That’s why private equity attracts determined individuals who know how to take calculated, imaginative risks. Success is the result of years of dedicated, hard work that demands massive personal sacrifice. But it’s not just the lure of profits that draws people to this career. What keeps professionals in the business long after they’re millionaires is the satisfaction of seeing opportunity where others see failure and crisis, and transforming it into a win that everyone benefits from.
Sachin Khajuria is a former partner at Apollo, one of the world’s largest alternative asset management firms, and is also an investor in funds managed by Blackstone and Carlyle, among other investment firms. He has twenty-five years of investment and finance experience. Sachin holds two degrees in economics from the University of Cambridge. He divides his time between New York, Switzerland, and London.
---
A backstage pass to the world of private equity.
We all love rags-to-riches tales. They inspire fantasies not just of plenty, but of hope. If someone else can turn nothing into abundance, perhaps we can too.
Yet the bulk of us sour when the rich become richer. We hear about founders and partners jetting about in private planes and earning salaries in the hundreds of millions – all by leveraging investments that aren’t their own – and it just doesn’t seem fair. In fact, it feels undeserved and selfish. It’s attitudes like these that have given private equity a bad rap.
But on what basis are these hard feelings being formed? And are they justified? Because when it comes to private equity, most people don’t actually know what goes on behind the scenes – or what it really takes to be successful in the field. And curiously, most of us don’t even realize just how tied to private equity we already are, whether or not we have investments.
This book by Sachin Khajuria, Two and Twenty is your backstage pass into the world of private equity. Find out what it is, how it works, and what it takes to succeed in this specialized, secretive financial field.
---
Private equity is extreme asset flipping.
You’ve probably seen those real estate “flip” shows on TV – the ones where an aesthetically pleasing couple buy a run-down property in an up-and-coming suburb. Over the course of an hour, you watch them demolish a wall here, build a deck there, and encounter a few hiccups like bad weather or unexpected costs. As the episode nears its end, you’re given a virtual tour of a slick new property, complete with designer furnishings and impressive landscaping. Then the auction begins. The house sells for a huge profit, and the couple is flush with cash, ready to seek out their next project.
In a way, private equity is the same – only the stakes are much, much higher. And, of course, instead of playing with a few hundred thousand dollars, you’re flipping assets worth millions.
So, what exactly is private equity?
In simple terms, private equity is a type of financial investment, in the same way that buying shares or putting savings in a high-interest account are types of investments. People use private equity to turn the money they have into even more money.
Sounds great, right? Especially if you’re someone who doesn’t have a regular paycheck, like a retiree. You want the money you have to support you for as long as possible, by multiplying as much as possible.
But one thing that distinguishes private equity from other types of financial investments is risk. First, you need a huge chunk of money to play this game – much more than if you were just buying a few shares independently. Why? Well, private equity typically involves flipping entire companies. These companies are usually in a state of crisis: they’re facing bankruptcy, or they’ve lost the bulk of their customers to competitors, or they’ve failed to modernize and can’t deliver anymore.
You might be wondering why anyone would invest in a company like that. The reason is potential. A private equity firm is one that makes investments on behalf of other organizations who represent individuals – like pension funds. The firm will see the ailing company as an opportunity. Its dire circumstances will make it cheap to purchase, and the firm will have an expert team who can guide it back to health – like those house-flippers who turn a dump into a palace. But even more than that, the team will transform the company into a business opportunity that the market salivates over. At the right moment, the firm will sell and walk away with double or triple what they paid. They win, the company wins, and, most importantly, the private investors that the firm represents win.
So, why is this risky?
Well, again, you need a lot of money in the pot to not only purchase an ailing company, but nurture it back to health over several years. That money, don’t forget, often belongs to retirees living on a fixed income. And unlike the stock exchange, where you can buy or sell at any time, investors can’t withdraw their money from a private equity investment scheme for an agreed period of time. This timeframe will be years – long enough to get the ailing company back on its feet. Finally, there’s always the risk that the flipped company won’t become profitable and gain a high purchase price, in which case the investment might only break even – or worse, it could sell for a loss. So, while private equity reaps investors high returns when it’s a success, when it fails, it fails dramatically.
But it’s the promise of those high rewards – and maybe even the adrenaline rush of those high stakes – that make private equity so tempting for investors and professionals alike.
---
Private equity is the hottest gig in town.
There’s a lot of buzz around private equity, and most of it has to do with money. Let’s look at some figures so you can appreciate why.
In the past decade, private equity has doubled to become a $12 trillion industry. Yep – that’s right. Not million, not billion – trillion. And in the decade ahead, it’s likely to double again.
Private equity is happening across the globe, embedded in our daily lives without us even knowing. You’re not going to know if a private equity firm is flipping the dating app you’re using, or has just bought the supermarket chain you shop at, or is using your pension fund to purchase a media services company with the goal of doubling your investment in a few years.
Demand for private equity has made dozens of firms spring up, but twelve major firms sit at the apex of the industry – including Blackstone, which manages around $875 billion in assets. That’s a lot of money . . . and a lot of responsibility to make the right calls for investors.
Now that you’re aware of the scale of money that’s at play, let’s look into another aspect of this industry that adds to its allure – its payment model.
Partners at private equity firms – the professionals making the big calls on which companies to invest in and when major deals should be made – are paid on the basis of “two and twenty.” They charge clients an annual fee of 2 percent of the capital invested, plus 20 percent of any profits. This money is divided among the team at the firm, meaning that everyone’s income and wealth is tied to the firm’s performance. A win for investors means a win for everyone.
Now, 2 percent might not sound like much, but don’t forget what kind of figures we’re talking about here. Two percent of $875 billion is more money than most of us will see in a lifetime. That’s what automatically gets paid to each firm annually. And 20 percent of profits – well, this is why senior partners in private equity are worth $100 million by the time they hit their forties.
With firms managing assets worth such staggering amounts, you might think that they have huge teams, which would dilute how much ends up in everyone’s bank account. But surprisingly, the opposite is true – and it has nothing to do with greed.
---
Private equity firms are worlds away from Wall Street.
Let’s take a quick tour through a typical private equity firm so you can get a sense of how they operate.
A career in private equity isn’t mainstream – it’s elite – and everything about it reflects this. We’ll dig a bit deeper into what makes it so elite soon, but let’s just focus on the basics for now.
The firm you’re visiting will likely have an exclusive address. If you’re in Manhattan, you won’t find it near Wall Street. You’ll need to travel north. In fact, you’ll probably find yourself on a street that flanks Central Park, where the firm’s boardroom enjoys the best views in town.
When you arrive, you’ll encounter heavy security. Confidentiality is nonnegotiable in private equity. If a rival firm gets tipped off about your business strategies, they’ll potentially try to buy the companies you have your eye on before you do, either stealing them from under your nose or bumping up that initial price tag by bidding against you. And that’s going to negatively impact your whole plan. Remember, it’s all about buying low and selling high.
Once you’re ushered into the office space, you’ll find yourself in a quiet, highly focused environment. The furnishing will speak of quality and functionality, and the massive kitchen will catch your eye. You’ll notice it’s fully stocked with an array of nutritious options and a top-notch coffee machine, so you don’t need to duck out for sustenance while you work.
The founder will have the largest office, but you likely won’t catch a glimpse inside. They’ll be busy having face-to-face discussions with the firm’s partners. This is standard practice rather than phone calls or emails – again, it’s all about confidentiality.
There might be about 20 or so partners in the firm, and their doors will be open to encourage transparency and collaboration. You’ll even hear a few talking to each other in a candid, serious way.
Each partner has a deal team that sits in nearby cubicles. The deal team’s job is to research every tiny detail about a company’s financial health and feed this information forward to the partner, who’ll then pitch the proposed deal to the founder. Collectively, the deal team is made up of four professionals, each with a different level of experience: an analyst, a mid-level associate, a junior partner, and a senior counsel. This team is responsible for strategizing deals and business plans worth billions. Keeping the team tight and lean means everyone gets a bigger chunk of the profits – but more importantly, it makes the team agile. Informed, quick decisions are what counts, and being close-knit makes that possible.
This small team structure means that every member has a huge amount of responsibility. There’s no one to step in or bail you out if you make a mistake that might cost you billions. That’s partly why a career in private equity is only for the select few.
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Only the elite become private equity masters.
Let’s use a fictional sketch to explore what it takes to be successful in the world of private equity.
Let’s say you’ve just landed a job as an associate in a top-tier firm. First – congratulations! You’ve just come to the end of a 12-month interview process, which has included two months of secret meetings with 20 different senior investment partners who’ve drilled you in every aspect of the industry. And you’ve been doing this while holding down a job as a financial analyst at Goldman Sachs – which you landed two years ago after graduating at the top of your class at Wharton. The punishing hours you’ve been putting in are just a taste of your new career path. It’ll demand that you work until midnight most nights – lucky there’s that well-stocked kitchen in your office – and you’ll typically work most weekends too. Good thing you’re ambitious and hardworking. You’re going to need to keep your eye on the prize.
Your new boss – a senior partner at the firm – throws you straight into your role. She has her eye on a supermarket chain called Foodmart. A family business, Foodmart has been selling groceries and staples at affordable prices in middle-class cities across the US for decades. But they failed to modernize. And when the Covid pandemic hit, they couldn’t compete with online stores offering home delivery.
Your first task will be research. You’ll need to report on every aspect of the business – its financial state, assets, liabilities, opportunities, management team, inventory, supply chains, marketing . . . everything. You’ll do the same for its competitors, until you know the whole sector intimately. But this is your jam. You love working with data, and you revel in complexity. When you’re finished, you’ll have produced reports hundreds of pages long. Your deal team will use them to develop a strategy – a business plan of how to flip Foodmart from bankruptcy to a market leader.
This is where the fun begins – interrogating all the potential options that might transform Foodmart, and running analyses of how these different options would play out financially. After all, your objective is to make profit, so your team needs to be confident in its decisions. You and your team will play devil’s advocate, picking apart each other’s business proposals and looking for weaknesses or blind spots. You’ll unearth every hole in your plan through rigorous cross-examination. This is also exactly what the senior partners and founder will do when your boss pitches her proposal to buy Foodmart to them – so it’s crucial that she’s thoroughly prepared.
It seems like your methodical, analytical approach has paid off – along with all those late nights. The founder gives your team the thumbs-up, and your boss negotiates the deal. Now, the real work starts. You spend the next 18 months working hard to transition an outdated grocery chain into an upscale, service-focused brand called Farmfresh. This means restructuring management, redesigning infrastructure, and repositioning the company in the niche market of fresh, organic produce.
Customers love the new membership scheme and the advice provided by in-store specialists. The free food-tastings add a sense of quality to the experience as well. Two years after the initial deal, stocks have risen by 30 percent and the firm has tripled the investment they’ve made. Your boss negotiates the company’s sale for a 300 percent profit, and you find yourself in line for a very respectful bonus. It amazes you that a team of just four people has pulled off such a feat. In your opinion, this – along with years of working 18-hour days, seven days a week – justifies the wealth-inducing “two and twenty” payment model.
---
When it comes to private equity, losing isn’t an option. Profits aside, protecting a client’s investment is paramount – not just for the sake of a firm’s own success and reputation, but because millions of pensioners are relying on that investment to support themselves. Your clients are paying a premium price for your services. So if you can’t promise them success, they should take their investments elsewhere.
That’s why private equity attracts determined individuals who know how to take calculated, imaginative risks. Success is the result of years of dedicated, hard work that demands massive personal sacrifice. But it’s not just the lure of profits that draws people to this career. What keeps professionals in the business long after they’re millionaires is the satisfaction of seeing opportunity where others see failure and crisis, and transforming it into a win that everyone benefits from.
April 17, 2024
I heard a Freakonomics episode about PE that featured this author & Brendan Ballou, author of "Plunder: Private Equity's Plan to Pillage America." I was intrigued enough to read both but went in knowing this book wasn't written for me but maybe for someone curious to get into PE and certainly not to adress criticism of PE to a general audience.
Let's start with something positive: the Conclusion was the most interesting part and I jumped to that after almost giving up halfway through because of lack of detail provided by the author in scenarios he presented and general tedium. There were interesting points about the growth of PE, where it fits in the ecosystem, and more.
Otherwise, I'm in the camp of other reviewers who describe this as an unabashed cheerleader for PE. I wasn't expecting it *not* to be, however, I thought it might at least address criticisms of PE to some extent. It was hardly mentioned when compared to the number of references to how desperately pensions funds need the "masters of private equity" to survive.
Generally, the author doesn't make a compelling case as to why PEs are successful beyond proclaiming they're the best of the best, innovative, have key data competitors don't, yada, yada, yada. He talks alot about risk that PE takes on which I suppose is the rationale for the generous 2 and 20 rule but, again, it's hard to swallow after reading Ballou's book, which provides specific case studies of PE all but destroying companies to make their nut - Toys R Us, Fairway Market (which I thought may be 1 of the scenarios described in this book), as well as forays into healthcare and infrastructure.
I may track down that Freakonomics episode to listen again, perhaps it'll soften my criticism.
Let's start with something positive: the Conclusion was the most interesting part and I jumped to that after almost giving up halfway through because of lack of detail provided by the author in scenarios he presented and general tedium. There were interesting points about the growth of PE, where it fits in the ecosystem, and more.
Otherwise, I'm in the camp of other reviewers who describe this as an unabashed cheerleader for PE. I wasn't expecting it *not* to be, however, I thought it might at least address criticisms of PE to some extent. It was hardly mentioned when compared to the number of references to how desperately pensions funds need the "masters of private equity" to survive.
Generally, the author doesn't make a compelling case as to why PEs are successful beyond proclaiming they're the best of the best, innovative, have key data competitors don't, yada, yada, yada. He talks alot about risk that PE takes on which I suppose is the rationale for the generous 2 and 20 rule but, again, it's hard to swallow after reading Ballou's book, which provides specific case studies of PE all but destroying companies to make their nut - Toys R Us, Fairway Market (which I thought may be 1 of the scenarios described in this book), as well as forays into healthcare and infrastructure.
I may track down that Freakonomics episode to listen again, perhaps it'll soften my criticism.
July 25, 2022
Utter nonsense.
October 2, 2022
All I could say is that I expected more. Highly repetitive and everything is described as a high-level, nothing in details.
January 27, 2024
While this explained the structure, purpose, and application of private equity well, it was fairly repetitive and one of the most biased books I’ve read in years. I see that private equity is in almost all areas of finance now, but I think this just made me more interested in evaluating investments to make sure no private equity is involved if possible.
October 30, 2024
no actual examples and no explanation of how carried interest effects the profit of private equity = 2 stars :/
October 17, 2022
An Explanation and Full-Throated Defense of Private Equity
I have a background in finance, but I had only a rudimentary knowledge of private equity which, as the author states, was once an investment niche. Over the years, even as the wealth allocated to private equity investment has grown enormously, the leading firms have found it advantageous to fly under the radar. This book is a good explanation of how private equity works.
Author Sachin Khajuria provides a clear explanation of the hard work behind successful transactions and how the leading firms justify the enormous fees they charge. The book is on weaker ground as the author argues that private equity investments, often involving major restructurings, are — in his telling — beneficial to everyone, including employees, customers, and community. While that may be the case, it’s not always so.
In the headlines about private equity deals, one thing that stands out is the enormous fees that are standard and which are the basis for the title of this book. That is, when pension funds, endowments, and sovereign wealth funds invest large amounts of money in a private equity fund, the firms take a fee of two percent annually on the capital invested. On top of that, when the firm closes out an investment, it collects 20 percent of the profits from a successful transaction. The profits for the firm can be enormous — hundreds of millions of dollars — and these fees are all made by using other peoples’ money. Moreover, as “carried interest” under a specific provision of the tax code, these profits are taxed at a rate much lower than personal or corporate tax brackets. No wonder these firms attract some of the best and the brightest, who work extremely hard in the hope to rise to partnership and achieve personal wealth that can reach $100 million or more.
The best part of the book is the explanation of how private equity firms function, with Khajuria using hypothetical case histories for illustration. These may be based in part on real transactions but they have been sanitized.
First we learn that private equity firms are unlike investment management firms that make money in the market by being passive investors and betting on the “right” stocks. Such firms are never involved in running a company.
The role of private equity firms is in some ways similar to that of venture capital firms. VC firms try to identify startup companies with a “great idea,” often in tech or other emerging markets, and help them obtain the capital they need first though private funding and ultimately through an initial public offering in the stock market.
Private equity firms, by contrast, are on the lookout for established companies that have fallen on hard times or that have failed to take advantage of opportunity. Some are at risk of imminent failure. Others are failing to achieve the profitability that can be obtained through a cold, hard, analytical look at business leadership, strategy, and ways to cut costs. Above all, there must be an opportunity to dramatically improve profit performance.
Once the private equity firm has identified a target, the next step is to structure a transaction that gives the firm effective control. Then the firm’s partners and staff are intimately involved in the company, often for a period of years. They are known to provide realistic analysis of every aspect of company operations and strategy. This can involve installing new management, new board members, and in many ways dictating how the business is restructured and run.
Is this always a good thing? Yes, the firm and it’s investors stand to gain huge profits. But what about founders and legacy owners, employees, customers, and the community in which the company has operated, sometimes for decades.
Here author Khajuria is on weaker ground. In his telling, the companies in which his firm invests are always better off — and often would not otherwise survive. To wring out enormous profits, the private equity firm likely will slash hundreds or thousands of jobs. In some of his cases, a company is floundering because the founding owners or their heirs have an irrational commitment to the traditional way of conducting business, to retaining long-serving employees, or to supporting the community in which they operate. Once the private equity firm takes over, it may relocate or close operations, abandoning a town in which the company has been for decades the primary employer, source of charitable support, and taxpayer.
There are examples among those Khajuria cites, where the company is doomed without private equity intervention. In that case, the radical surgery that the author describes is necessary.
But in other examples, it is not clear that the changes imposed by the private equity firm don’t enrich the firm and its investors at the expense of everyone else. One example cited: The firm assumes control over a family-owned business of cookie stores when none of the founder’s heirs shows an interest in the business. The culture is paternalistic and the business is modestly profitable. Once it takes over, the private equity firm does everything to wring our profits without regard to employees or other stakeholders. Everything is data-driven, including the extent to which product quality could be cheapened without losing customer loyalty. Had it not been for private equity intervention, the cookie company might have continued to earn a decent profit, reward its loyal employees, and be a pillar of the community. It simply would not have earned huge profits that enriched its new investors.
At the end of the book, Khajuria addresses extensions of the firm’s businesses that flirt with conflict of interest. “The firm’s infrastructure fund could, with the special permission of its investors, acquire the storage and pipelines [of an energy company in which the firm has invested]. Trading in a firm’s web of affiliated funds might even become a ‘new normal’ for complex deals,” the author observes. As private equity firms chase profits, such transactions raise the question of whether such deals are arm’s length or insider enrichment.
This is a book worth reading because it raises the curtain on how private equity works. Often, such firms legitimately earn the enormous profits that result from their efforts, and concurrently save jobs and businesses. In other situations, this is less clear. Perhaps unintentionally, the book helps us to have an informed debate about whether from a regulatory perspective private equity should be so unrestrained.
I have a background in finance, but I had only a rudimentary knowledge of private equity which, as the author states, was once an investment niche. Over the years, even as the wealth allocated to private equity investment has grown enormously, the leading firms have found it advantageous to fly under the radar. This book is a good explanation of how private equity works.
Author Sachin Khajuria provides a clear explanation of the hard work behind successful transactions and how the leading firms justify the enormous fees they charge. The book is on weaker ground as the author argues that private equity investments, often involving major restructurings, are — in his telling — beneficial to everyone, including employees, customers, and community. While that may be the case, it’s not always so.
In the headlines about private equity deals, one thing that stands out is the enormous fees that are standard and which are the basis for the title of this book. That is, when pension funds, endowments, and sovereign wealth funds invest large amounts of money in a private equity fund, the firms take a fee of two percent annually on the capital invested. On top of that, when the firm closes out an investment, it collects 20 percent of the profits from a successful transaction. The profits for the firm can be enormous — hundreds of millions of dollars — and these fees are all made by using other peoples’ money. Moreover, as “carried interest” under a specific provision of the tax code, these profits are taxed at a rate much lower than personal or corporate tax brackets. No wonder these firms attract some of the best and the brightest, who work extremely hard in the hope to rise to partnership and achieve personal wealth that can reach $100 million or more.
The best part of the book is the explanation of how private equity firms function, with Khajuria using hypothetical case histories for illustration. These may be based in part on real transactions but they have been sanitized.
First we learn that private equity firms are unlike investment management firms that make money in the market by being passive investors and betting on the “right” stocks. Such firms are never involved in running a company.
The role of private equity firms is in some ways similar to that of venture capital firms. VC firms try to identify startup companies with a “great idea,” often in tech or other emerging markets, and help them obtain the capital they need first though private funding and ultimately through an initial public offering in the stock market.
Private equity firms, by contrast, are on the lookout for established companies that have fallen on hard times or that have failed to take advantage of opportunity. Some are at risk of imminent failure. Others are failing to achieve the profitability that can be obtained through a cold, hard, analytical look at business leadership, strategy, and ways to cut costs. Above all, there must be an opportunity to dramatically improve profit performance.
Once the private equity firm has identified a target, the next step is to structure a transaction that gives the firm effective control. Then the firm’s partners and staff are intimately involved in the company, often for a period of years. They are known to provide realistic analysis of every aspect of company operations and strategy. This can involve installing new management, new board members, and in many ways dictating how the business is restructured and run.
Is this always a good thing? Yes, the firm and it’s investors stand to gain huge profits. But what about founders and legacy owners, employees, customers, and the community in which the company has operated, sometimes for decades.
Here author Khajuria is on weaker ground. In his telling, the companies in which his firm invests are always better off — and often would not otherwise survive. To wring out enormous profits, the private equity firm likely will slash hundreds or thousands of jobs. In some of his cases, a company is floundering because the founding owners or their heirs have an irrational commitment to the traditional way of conducting business, to retaining long-serving employees, or to supporting the community in which they operate. Once the private equity firm takes over, it may relocate or close operations, abandoning a town in which the company has been for decades the primary employer, source of charitable support, and taxpayer.
There are examples among those Khajuria cites, where the company is doomed without private equity intervention. In that case, the radical surgery that the author describes is necessary.
But in other examples, it is not clear that the changes imposed by the private equity firm don’t enrich the firm and its investors at the expense of everyone else. One example cited: The firm assumes control over a family-owned business of cookie stores when none of the founder’s heirs shows an interest in the business. The culture is paternalistic and the business is modestly profitable. Once it takes over, the private equity firm does everything to wring our profits without regard to employees or other stakeholders. Everything is data-driven, including the extent to which product quality could be cheapened without losing customer loyalty. Had it not been for private equity intervention, the cookie company might have continued to earn a decent profit, reward its loyal employees, and be a pillar of the community. It simply would not have earned huge profits that enriched its new investors.
At the end of the book, Khajuria addresses extensions of the firm’s businesses that flirt with conflict of interest. “The firm’s infrastructure fund could, with the special permission of its investors, acquire the storage and pipelines [of an energy company in which the firm has invested]. Trading in a firm’s web of affiliated funds might even become a ‘new normal’ for complex deals,” the author observes. As private equity firms chase profits, such transactions raise the question of whether such deals are arm’s length or insider enrichment.
This is a book worth reading because it raises the curtain on how private equity works. Often, such firms legitimately earn the enormous profits that result from their efforts, and concurrently save jobs and businesses. In other situations, this is less clear. Perhaps unintentionally, the book helps us to have an informed debate about whether from a regulatory perspective private equity should be so unrestrained.
June 16, 2022
I have only two words unfortunately. Downright terrible.
April 30, 2023
A biased and conceited sales pitch for PE. I’m pro-PE myself and it still struck me as uneven and disingenuous. Reads like sales material. Might be worth reading if you’re in high school
September 2, 2023
This book is the worst piece of financial mumbo-jumbo ever published. Absolutely Zero Star- I need my money back!
Read
December 8, 2025A peek behind the curtain of private equity. Khajuria takes you through the mindset of an investment committee, the constant scenario planning, the obsession with downside protection, and the drive to stack the odds in their favor. For an industry that usually keeps its cards close, this book does a solid job of showing what the day-to-day looks like, from junior analysts all the way up to partners.
That said, it’s not a balanced take. Private equity is painted in a flattering light, and the tone leans toward “everyone should have access.” Still, hearing it from someone who’s been a partner at Apollo makes it worth the read. The examples are high-level, but they give you a sense of how deals are evaluated and why certain opportunities make the cut. It also underscores something important: to succeed in PE you need serious financial literacy. I finished the book wanting to dig deeper into accounting and capital structures.
On fees, Khajuria doesn’t shy away from the reality, they’re steep. And yes, they’ll likely come down over time. But the fact that institutions keep allocating 20%+ and re-upping for new vintages tells you they believe the returns justify the cost.
If you’re curious about how big decisions get made, what really matters in deal selection, and how the economics tie back to listed firms, this is a quick, energizing read that might just spark your interest in the mechanics behind the headlines.
Notable Quotes:
“For the major private equity firms that manage multiple forms of private capital and are publicly listed, one of the key attractions to public market investors of their listed stock is the stability and growth of these management fees.”
“A private equity firm’s structure has to be tight-knit, even as assets under management grow materially, in order to remain decisive and nimble, to maintain the culture and know-how. And keeping the culture and know-how of the firm central to how the investment professionals invest is vital.”
“Aspiring private equity masters can expect to spend up to five years at this end of the pyramid before moving up to the next rung: the middle layer, whose members serve as the day-to-day deal quarterbacks and are responsible for quality-control checks on the juniors’ investment work. The middle layer is the center of the private equity pyramid, and it consists of professionals who are generally in their late twenties to mid-thirties.”
“A rough rule of thumb is that a third of the work done on a private equity investment is the entry, a third is portfolio management, and a third is the exit.”
“Put bluntly, the fate of the Firm’s stock price rests just as much on the growth of its assets under management as on how well those assets perform.”
“unlike so many other areas of business the most important decisions are often taken without emotion.”
“What all this means is that increasingly, as private equity gets bigger, the intelligence that its professionals gather plays a bigger role in tilting the odds in their favor.”
That said, it’s not a balanced take. Private equity is painted in a flattering light, and the tone leans toward “everyone should have access.” Still, hearing it from someone who’s been a partner at Apollo makes it worth the read. The examples are high-level, but they give you a sense of how deals are evaluated and why certain opportunities make the cut. It also underscores something important: to succeed in PE you need serious financial literacy. I finished the book wanting to dig deeper into accounting and capital structures.
On fees, Khajuria doesn’t shy away from the reality, they’re steep. And yes, they’ll likely come down over time. But the fact that institutions keep allocating 20%+ and re-upping for new vintages tells you they believe the returns justify the cost.
If you’re curious about how big decisions get made, what really matters in deal selection, and how the economics tie back to listed firms, this is a quick, energizing read that might just spark your interest in the mechanics behind the headlines.
Notable Quotes:
“For the major private equity firms that manage multiple forms of private capital and are publicly listed, one of the key attractions to public market investors of their listed stock is the stability and growth of these management fees.”
“A private equity firm’s structure has to be tight-knit, even as assets under management grow materially, in order to remain decisive and nimble, to maintain the culture and know-how. And keeping the culture and know-how of the firm central to how the investment professionals invest is vital.”
“Aspiring private equity masters can expect to spend up to five years at this end of the pyramid before moving up to the next rung: the middle layer, whose members serve as the day-to-day deal quarterbacks and are responsible for quality-control checks on the juniors’ investment work. The middle layer is the center of the private equity pyramid, and it consists of professionals who are generally in their late twenties to mid-thirties.”
“A rough rule of thumb is that a third of the work done on a private equity investment is the entry, a third is portfolio management, and a third is the exit.”
“Put bluntly, the fate of the Firm’s stock price rests just as much on the growth of its assets under management as on how well those assets perform.”
“unlike so many other areas of business the most important decisions are often taken without emotion.”
“What all this means is that increasingly, as private equity gets bigger, the intelligence that its professionals gather plays a bigger role in tilting the odds in their favor.”
July 29, 2022
I received a copy of this book for free in a Goodreads giveaway.
I knew pretty much nothing about private equity before reading this book. Unfortunately, I can't say I know much more than that after reading it, since it was just so dry and full of vague situations. There are many hypothetical situations presented in this book, which are apparently mostly based on real situations, but because the author strips out all of the specifics, they became harder to follow and a lot less memorable. The book hammers home the point that these private equity companies employ a wide range of tactics and expertise to get huge returns on investments that many other people may not even look at or think about, and basically every chapter is a variation on that central message. I couldn't tell you what differentiates one chapter from another, though, and it felt quite repetitive. Most of the generic scenarios in this book is some form of the private equity company (always called "The Firm" and not anything specific) investing in something, creatively shaking things up in various ways, and hopefully getting a high rate of return on it. But there are no people's names at all, so it's basically impossible to get attached to anyone and root for them. On the plus side, it did make me a bit curious to find out more about this industry that I knew nothing about that moves so much money around. I just wish this book told a better story and didn't get bogged down with a bunch of technical details described in generic, vague ways.
I knew pretty much nothing about private equity before reading this book. Unfortunately, I can't say I know much more than that after reading it, since it was just so dry and full of vague situations. There are many hypothetical situations presented in this book, which are apparently mostly based on real situations, but because the author strips out all of the specifics, they became harder to follow and a lot less memorable. The book hammers home the point that these private equity companies employ a wide range of tactics and expertise to get huge returns on investments that many other people may not even look at or think about, and basically every chapter is a variation on that central message. I couldn't tell you what differentiates one chapter from another, though, and it felt quite repetitive. Most of the generic scenarios in this book is some form of the private equity company (always called "The Firm" and not anything specific) investing in something, creatively shaking things up in various ways, and hopefully getting a high rate of return on it. But there are no people's names at all, so it's basically impossible to get attached to anyone and root for them. On the plus side, it did make me a bit curious to find out more about this industry that I knew nothing about that moves so much money around. I just wish this book told a better story and didn't get bogged down with a bunch of technical details described in generic, vague ways.
September 28, 2022
A quick read with some interesting information for those interested in the very basic workings of private equity ("PE").
Overall I found the book slightly tedious and it seemed to make reference to some industry insider jokes (the way certain deals are referred to, hotels that are mentioned, founders alluded to, office buildings, etc.) that are hardly funny for outsiders. As a very basic source of information this book is not bad but it just doesn't choose any specific direction to provide enough of such basic information on. Instead it "dips" into several areas lifting a tiny bit of the PE veil without actually saying anything substantial (sometimes up to the point of becoming cringeworthy), and then moving on the next topic.
I feel the author missed some valuable opportunities to enlighten readers at some important junctures on issues such as deal structuring, partnership hierarchy, or simply how to make a career in private equity. Had he chosen any area to focus on this book might have been more enjoyable. As it is, I would only recommend this book to anyone who wants to learn about PE and is looking for a quick read (instead of something more substantial as "Barbarians at the Gate" or "King of Capital").
Overall I found the book slightly tedious and it seemed to make reference to some industry insider jokes (the way certain deals are referred to, hotels that are mentioned, founders alluded to, office buildings, etc.) that are hardly funny for outsiders. As a very basic source of information this book is not bad but it just doesn't choose any specific direction to provide enough of such basic information on. Instead it "dips" into several areas lifting a tiny bit of the PE veil without actually saying anything substantial (sometimes up to the point of becoming cringeworthy), and then moving on the next topic.
I feel the author missed some valuable opportunities to enlighten readers at some important junctures on issues such as deal structuring, partnership hierarchy, or simply how to make a career in private equity. Had he chosen any area to focus on this book might have been more enjoyable. As it is, I would only recommend this book to anyone who wants to learn about PE and is looking for a quick read (instead of something more substantial as "Barbarians at the Gate" or "King of Capital").
June 21, 2023
Read like a "day in the life of a PE investor" guide. Very basic material and no real insight gained even though I do not work in finance and only have basic knowledge of the private equity industry. The book is full of hypothetical situations which are seemingly based on real examples, but he only generally refers to them as "The Firm" or "The Founder" which undermines the credibility and persuasiveness of his content. There is so much information out there, why couldn’t he have given real life examples? Disappointing since I was expecting much more as this book was written by a former partner at Apollo, and he could have shared so much insight that only someone from his background could have given.
September 2, 2022
If you are a teacher or anyone with a pension, this book is a must read. Your retirement is in the hands of private equity and you should have a basic understanding of how and where your money is being invested. Private equity has tentacles in every industry now—ambulances, coffee shops, TV stations, retail, etc. but most consumers have no idea. I used to be a big firm lawyer, so have a basic understanding of the industry, but I still learned a lot and found the glossary of private equity terms helpful. I also liked how the author does not have an agenda about private equity being good or bad. The bottom line is private equity is powerful and ubiquitous so you may as well understand it.
July 19, 2022
Really interesting look at the private equity industry. It gives you a bird's eye view of the industry as well as enough of the nitty gritty details to make it an exciting read. Eminently understandable, this book guides you through the painstaking minutiae of the world of private equity in all its outstanding glory, as well as its foibles. A must read for the average investor as well as the more seasoned financial professionals of all stripes, this book does a great job of penetrating the sometimes hidden, murky world of high stakes, long term finance. A must read!
July 21, 2022
“Private equity is the new big finance”
This book did a wonderfully effective job at teaching the reader, in layman terms, the gist of the alternative assets market. I enjoyed the way that the author created fictitious scenarios for the reader to understand the life cycle of a private deal and the way in which these companies are an integral part of our economy today, even if we cannot see them as obviously as public groups.
This book did a wonderfully effective job at teaching the reader, in layman terms, the gist of the alternative assets market. I enjoyed the way that the author created fictitious scenarios for the reader to understand the life cycle of a private deal and the way in which these companies are an integral part of our economy today, even if we cannot see them as obviously as public groups.
January 3, 2023
This book gives a behind the scenes account of the structure and culture or private equity funds. It explains how the investing works, how they flip companies, and how they use data to make decisions. It also talks about the company hierarchy, how they are managed, the competitive nature of the industry and how its about winning at all cost. As someone who knows little about this industry, this book taught me some of the basics and opened a window to a world quite different than my own.
August 28, 2023
Nice primer, but go in open-eyed. You get an opinion and a perspective from someone deep in the industry. Is interesting how internally coherent and justifiable the PE world is viewed.
Fictional examples make it tough to credibly buy into the author’s position.
Pension funds must have ranked amongst the top phrases that appear throughout the book - as part of the underlying argument that PE does good because they sustain returns for you and me, through our pensions.
Fictional examples make it tough to credibly buy into the author’s position.
Pension funds must have ranked amongst the top phrases that appear throughout the book - as part of the underlying argument that PE does good because they sustain returns for you and me, through our pensions.
May 20, 2025
another fascinating book abouy private equity, which is becoming mainstream yet most people knows little about it. as someone with no financial background, I find it amazing the more I read about them. taking great risks expecting almost unlimited profits, each PE firm has its own characters. its just like a well designed game with endgame unknown. like the author said its too big to ignored and have to be engaged. some parts feel like fictional and I enjoyed it
February 2, 2025
A great overview of the private equity industry utilizing real world (names and terms are changed but it can be easy to tell who the author is talking about sometimes) case studies with crucial lessons about the industry sprinkled in.
Gives the layman a peak inside what private equity is and why it’s important.
Gives the layman a peak inside what private equity is and why it’s important.
December 28, 2022
Two and Twenty (2022) provides an up-close-and-personal account of the mysterious world of private equity. It gives insights into this unique branch of the finance sector and explains what sets it apart from other investment models.
Private equity is extreme asset flipping.
Private equity is extreme asset flipping.
This entire review has been hidden because of spoilers.
September 3, 2023
The glossary is interesting, if you are not familiar with the terms.
The book has a lot of potential, but often fails to get it over the hump. The constant glorification get boring pretty quickly and doesn't add much value.
The book has a lot of potential, but often fails to get it over the hump. The constant glorification get boring pretty quickly and doesn't add much value.
May 9, 2024
Repetitive
An impressive feat of providing zero meaningful information other than private equity likes to make money and always makes money mixed with be painfully redundant.
Waste of time
An impressive feat of providing zero meaningful information other than private equity likes to make money and always makes money mixed with be painfully redundant.
Waste of time
July 8, 2022
Good information. Very informative
July 11, 2022
Accurate portrayal of being in the industry at the top level. The focus on returns should be relentless. Great sharing
July 16, 2022
insightful
A very insightful and interesting perspective of a tremendously influential industry. It is very well written, entertaining to read and easy to understand.
A very insightful and interesting perspective of a tremendously influential industry. It is very well written, entertaining to read and easy to understand.
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