The beginnings of private equity industry can be traced back the post-World War II era as a response to the economic gloom caused by the war’s aftermath. The late 1940s, in contrast to the state of the finance industry during those times, was the golden age of the formation of the world’s very first venture capital firms: the American Research and Development Corporation (ARDC) and the J.H. Whitney & Company.
In the 1980s, private equity investors in the U.S. recorded a boom in large buyouts on Wall Street, participated by two famous PE investors: Henry Kravis and Jerome Kohlberg, Jr. of the Kohlberg Kravis Roberts (KKR), a modern global investment firm.
Over just a period of ten years (from the end of the 1970s through 1990s), records show thousands of leveraged buyouts, amounting to an overall transaction value of $250 billion. The same decade also produced major private equity firms like Hellman & Friedman, The Carlyle Group, Bain Capital, and the Blackstone Group.
The deterioration in economic and financial performance in the U.S., for instance, totally changed the recent history of the private equity industry and the investment industry as a whole. Before 2008, private equity firms used to have the freedom and capacity to complete huge buyouts, thanks to low-interest rates, laid-back lending procedures, and even easy access to debt-financing.
Come 2008, fewer buyouts were observed, recording only small volumes of completed deals. The figures drastically dropped, from the early years of the 21st-century value of trillions to just over $400 billion from 2008-2010. However, as soon as the economy recovered from this recession, private equity buyouts slowly found its way back to the limelight, closing billion-dollar buyout deals once again.
Today, the global private equity industry holds over $2 trillion in assets and a committed capital value of $1 trillion.