Will tougher competition and increasingly demanding investors cause the industry to consolidate? Sir Ronald Cohen of Apax Partners thinks that over the next decade the private-equity industry will polarize. At one end, a few big global industry leaders will emerge — "maybe three or four dominant brands with high returns"; at the other, small specialist firms will thrive. In the middle, however, many firms will find it hard to compete. His prediction is plausible, and the losers may include some famous names.
Many have already stated this, but I think it's interesting to note it probably holds true across the entire asset class. Not only will buyout shops benefit from brand or specialization, but so should venture groups. With the increased complexity of technology, the maturing of the industry, and the globalisation of innovation; we are beginning to see this further stratification in to industry focus, geographic focus, and investment stage. As this continues to happen, the dominant brands will likely outperform the rest on an average basis as they can withstand & adjust to the changes in the economic over time.
We'll see, I'm still rooting for the little guy.