A Practical Guide to Buyouts and Growth Equity

Welcome to Common Fund Institute online, dedicated to the advancement of investment knowledge and the promotion of best practices in financial management. Hi, y'all. Thanks so much for for taking the time. I'm Tor Martinson. I'm on the buyouts and growth equity team here at Common Fund. We wanted to spend a few minutes going through kinda what we're seeing in the buyouts and growth equity landscape and what things you should consider to, to invest in the buyouts and growth equity markets. So I'll jump right in. First question we thought we we'd start with is first, why allocate to private equity? And so first slide we have is just on the looking at the number of public companies that you have on the left side there in the in the table, and how that has declined over time with over the last looking thirty years ago in nineteen ninety six when the number of US public companies peaked at about eight thousand companies, it's down almost fifty percent since and down to four point six thousand companies as of as of twenty twenty three. And so if you only invest in the public markets, you're missing a lot of the investable universe of of the companies that are really driving the US economy forward. Moving to the right, the the right chart, you can see here we list all companies that have over five million of revenue in the US, both public and private. And and the public companies, the four point six thousand I I just touched on, that's the little light blue color at at the far top. And so you can see there's over a hundred some thousand private companies in the US here. So if you don't invest in the private markets, you're missing ninety six percent of all potential companies in the in the US with with over five million of revenue. And so we think there's a huge universe of opportunity here in one why an institution should consider potentially investing in in the private markets to really achieve a true diversified equity exposure as a as a whole. The next side slide we wanted to touch on is why you'd consider investing in the private markets. It's looking at annualized return by by asset class. And so the other thing is is is it worth the the work to invest in the private universe? And our answer is and what the data shows is yes. Yes. It is. And so on this slide, we are showing performance for ten year annualized by asset class showing median in light blue, top quartile in dark blue, and then bottom quartile in the orangish color, I guess, I'll I'll call that. By asset class, so on the far left side being US fixed income, you can see no real dispersion there. The average returns about two point three percent. Moving to US public equity, the median return there is about eleven percent for the managers. There is some dispersion with top quartile managers generating about a thirteen percent return, while bottom quartile are closer to a ten ish percent return. So certainly some some dispersion there and overall strong results have have been, historical over the last ten years ending nine thirty twenty twenty four. But then moving into the private markets as a whole with venture capital and then buyouts and growth equity or US private equity on the far right, you can see that one average returns even in this in these areas are much stronger with the median returns of fifteen percent for venture and almost eighteen percent for buyouts and growth equity, as well as, top quartile returns significantly outperforming that at over twenty two percent for venture and in over twenty five percent for for private equity. What really stood out to me on on this chart is that if you look at just the buyouts and growth equity, even bottom quartile managers have been able to outperform the public markets and the public it appears who focus on just investing in the public markets at an eleven point four percent annualized ten year return investing in the private markets versus the public equity market median at only eleven point one percent. So you can see the performance has been very strong, especially historically, and and certainly has made the the juice worth the squeeze for, for investing and and focusing on the private markets as a whole. If we flip ahead one more slide, another way we thought to to eventually show this is by looking at how institutions broken down by their long term performance, performance over a number of years and looking at based on institutions that have over twenty percent plus into illiquid or private investments as well as institutions that are below twenty percent as a on on a private equity or a private or illiquid allocation as a as a whole. And so the institutions with less than twenty percent are in the dark blue on the left side of each of the individual time charts, and the institutions with over twenty percent are light blue. You can certainly see that in some smaller one year off instances that the, the institutions with private investments less than twenty percent have outperformed on a on a shorter term basis. But in every period from three, five, ten, fifteen, and most importantly, the longer term, twenty and twenty five years, having more illiquid exposure has led to larger and higher returns by, to those institutions that have more private investment exposures. So with over twenty five year experience of over a hundred basis points, improved performance on the entire portfolio by investing over twenty percent into illiquid. So we think it's certainly worth it from an institution standpoint, especially as the returns are getting harder and harder to come by. To really drive long term performance, it it is helpful to have illiquid allocations as a as a whole. The the next slides we wanted to touch on just show kind of the the cash flow duration and really how you should think about investing in the illiquid markets as a whole. And so there's a number of different ways you you can, you can invest in the return risk hurdles for all of those as well as the how actual illiquid these these classes are do certainly vary across the across the board with starting on the top of this stage where it is probably the riskiest but also offers the potential highest return venture capital where you are really are investing at the, onset of a company idea formation. This will often be the longest term to get full look or get actual liquidity as you are investing very early on in a company its itself. And so we'll ultimately hold that company exposure over a very long time. And so you have to be ready for that illiquid exposure that you will have and how long it will take to get there. The next issue where we will spend the majority of of of this call going through is really on the private equity and co investments or buyouts and and growth equity side. This is often into maturing companies. They have generated actual revenue and earnings, and they're really looking to help often partner with a private equity firm to help reach the help their company reach the next level as a as a whole. And and they are producing cash flows, and so sometimes you'll have dividends paid out throughout the whole period. But also, the majority of the cash will be sold once you will be realized at exit once you've fully sold that company as a whole. So the duration is a little bit shorter than venture capital, but but it's still very long in nature and, you need to be prepared for that. In the dark blue is, touching on the secondary market where you are often buying a a private equity commitment often at a discount to its current NAV, and it is already invested into companies, has been invested in the past. And and so it often has a little bit shorter of a duration as well as a lower return and and risk hurdle as a whole as the companies are pre identified, are, already in the ground, and you often able to buy that at a at a discount. Then in the orange and and in the teal color touch on private real estate and private credit, which are, have less likely return and risk kind of associated with them is also have lower duration and and so are shorter, on the on the x axis there and how illiquid they they really are. We we thought we'd touch on why how we could structure your program and underwrite a private equity program as a as a whole and what the, questions you should really ask and and be focused on, when you when you are going to build out a private equity program. With the first one, you really should set your investment framework and consider some key questions when you really are building out this portfolio to start with. First, what is your institution's investment objectives? How much liquidity does the institution need, and what is your risk appetite itself, as well as then how much from all of these, how much portfolio diversification you are able to to what is the optimal amount of portfolio diversification that you should take across your portfolio? You should you probably shouldn't be investing all all in private equity in just one individual company itself. You should really build out a diversified approach. Vintage year diversification is is one thing you often hear us and and others in the industry preach and invest a consistent amount every year in in kind of over a long time can really generate the strong outsized performance. And then on the right side of this chart, it's really looking at how to access private equity. There's a number of different ways you can The two easiest kind of we outlined here are either go direct where you are directly building your portfolio. You are sourcing the managers, identifying them, underwriting them, going through the legal review, and ultimately making a commitment into private equity funds and and managers themselves, and then as well as tracking or reporting those on a on a ongoing basis. And so from a diversification standpoint, you should certainly invest in numerous of these direct private equity firms. And so if your institution is set up to go direct, it often can be the best choice for for larger institutions with large teams that can can do this work of identifying, diligence, and enclosing on these direct private equity commitments themselves. But you often need a larger team in a larger organization to do all that. It is is a lot of work to find, underwrite, and and monitor those on an ongoing basis. And so another option is to go through a a fund to funds manager itself, where you are identifying the individual fund to fund manager you want to partner with. That manager then does everything else of going to finding the underlying fund investments that it will make into underlying private equity funds itself. And so this can really helps be one single stream kind of offering sub docs reporting or accounting basis to you as a and as an end client and can help you put curated to what you need as well as then helping take a lot of the burden off of the underlying, metrics of of diligence and then closing on on these underlying investments themselves. And so you really have to consider what is the best what your institution is best set up for to to access these the private equity universe. And then once you once you've determined that, then that's really is setting a plan of how you want to access the private equity universe as a whole in creating a commitment pacing plan. As I mentioned, you really do wanna take vintage year diversification of investing in roughly equal amounts across each vintage year itself. It is very hard to know ex ante what vintage year is going to be a really good investment year to invest in private equity. And so investing across all years is the way to ensure that you are getting the exposure to good, companies across kind of all all time periods as a whole. And so first, you create the commitment pacing plan, how much you would like to invest each year. And and for instance, in this case, we said you will invest ten million dollars into five funds every year for fifty million dollar total funds per year commitment. You'll then, end of building up from that, really look for where do you wanna be focused on and and touch on the strategy, the geographies, the industries, and the kind of portfolio composition parameters that you are looking to to identify on the right there. So we touch on some of large LBLs. These are your larger larger firms that are often investing into larger companies than themselves. Small and mid market buyout and growth equity firms are really where we as a firm focus on, which I'll get to in a in a few slides. Add some special situations as well as growth equity and have a nice pie chart of the all the different private equity universe of sub strategies to make sure you have you you kind of incorporate a lot of them. As well as private equity isn't just the US then. We do really believe in Europe and other developed markets in particular offer some really compelling private equity universe. And so to expand and to reverse if I broader beyond that, consider investing in other geographies as well, also, which can be hard and and kinda need the manpower and need the team to to really kind of lead a lot of that. And then the sectors that that private equity most is is, focused on are technology or enterprise software and services, health care, business services, and industrials or consumer as a as a whole. And so really focused on on making sure you are invested across all of these these subsectors as a as a whole. So you aren't just tied to one to a broader health care trend as a whole. You wanna be more diversified across these industries or or macro themes. And then when you ultimately so now you've set the plan. You know exactly how much you wanna wanna invest every year. You're wary. You kind of are are generally targeting on the the, the the portfolio that you want to build. Now when you are actually diligencing a private equity manager, here are some investment considerations we we thought would be helpful to to to focus on with first, just focusing on the track record of the manager in in question. Do they have a history of who wanna making these kind of investments, finding them, be able to help these companies grow and become better companies, and and have a history of proven ability to invest. And then ultimately, most importantly for all of us, is return capital to investors. And you really want them to have a demonstrated investment experience across this core sectors that they're focused on. Is their health care manager often having some health care expertise or operating networks of of doctors or or or the like is very important to knowing kind of the regulatory nuances of the health care industry or or whatever subsector they focus on is is quite important. So having a demonstrated investment experience and expertise across their sectors is certainly a a a useful area to to spend some time on. Next, well, our personal viewpoint, I hear at Common Fund is that managers should use conservative leverage. You don't wanna be in a position where you're overlevered. You can't take any wins that then may come into the market or any kind of headwinds that that may occur at an underlying company level. If you are overlevered, it is very hard to adjust if there is any any kind of, blip in performance as a performance as a whole versus if you are conservative on the amount of levers that you use, you can much much better weather the storm on a go forward basis and and operationally help improve these companies and and really focus on value creation, not just from levering the business and just from from, from using debt to generate your returns, but really from actually driving top line and bottom line growth, for the companies them themselves to drive investment returns. Often, the way we found managers are able to do that is by having a high touch operational approach where they aren't investing in a wide shotgun approach or investing into a hundred different private equity companies. You wouldn't be able to spend enough time with each underlying company to give it the attention and time that it needs to really to really flourish and and grow. And so having an attractive portfolio company over investor ratio level of of having the team bandwidth to really support the initiatives that they're doing. And then the last point here is it what is certainly one of the most important in is one of the most important. Really looking at the alignment that you have with the general partner themselves and making sure that they will only do well if you do well by, one, having a sizable GP commitment with their dollars invested alongside your your dollars as as well or or is to really be incentivized to drive strong performance for the fund through the fund terms via carried interest, to to to really kind of generate strong returns for themselves as well as for for you as an an LP as a whole. And so these are some of the investment considerations. We we certainly think through every time we invest in a in a new private equity group. And then kind of double clicking into that, the manager diligence consideration. So as you continue to do due diligence on on a manager, there we outlined three different real buckets that you focus on. With the first one, focus on the strategy or the team. And so this will be through a review of the manager materials or having some calls or or on-site meeting with the managers to review what is their investment strategy, what is the diligence process, how are they able to generate the the returns that they have historically and and find the companies that they are able to invest in. We also wanna understand kind of the does the strategy, one, make sense from a high level overview? Two, is it additive to what you currently have in your portfolio? And and then, three, do spend some reference calls with with key stakeholders who have worked within the worked with the individuals before. Is this somebody who is trustworthy, who you would invest your own personal capital with, and, you would feel comfortable having your mom's capital invested with them is kind of the viewpoint we always we always like to take. And so understanding the strategy and the team diligence first is is kind of the first and foremost most important. Then, you know, it'll kind of lead into quantitative analysis and kind of tie together a lot with with some of the strategy and and and investment track record performance of looking at their track record review, doing comprehensive data analysis on how have they generated the performance that they have generated. How does this compare relative to other managers who may invest in a similar in a similar style or similar sector? You know, are they does their performance look strong just because they've ridden a great tailwind of software had been eating the world for the last decade plus and and they've been investing in software? Or are they really generating outsized returns relative to other software investors? And benchmarking managers relative to the competitive peer set is certainly helpful to understand that are they generating real alpha and real outperformance, or are they just capturing data of investing kind of the the whole universe has risen and so they've, they've done well as the universe has risen. And in in conjunction with that, going through portfolio company reviews of really seeing the fundamental changes that a manager has on a company by company basis is really helpful. And if you look at the underlying quantitative analysis, to understand how a manager is is generating the performance they have and in a vital part of diligence in a new potential investment. So if both of those two check out and they still are in inclined and interested in investing, that's when you kinda we really loop in the operational and risk diligence of understanding the risk management procedures that the company has, how they value their companies, or do they have a conservative approach where they often are taking a discount to what they think they could ultimately sell the company for? Who is it a very aggressive approach with evaluation they're currently holding the companies at maybe maybe a bit too high? And are they under real reflection of the current value of these private companies? What are the DEI policies or metrics that the the firms may have? Is there any legal or compliance kind of issues? And what is the, if needed, ESG reporting that the managers may do it? So spending a fair amount of time on the operational or risk diligence is is certainly a key consideration before making a a a private equity investment. We we thought in conjunction so that's kind of your build how to build a private equity portfolio and why you'd wanna build one. Now we thought it'd be helpful to touch on kind of the macro update in in outlook we have going forward here in in twenty three five. And so first and foremost, we think long term private equity outlook remains attractive. On the study on the left hand side of the chart, you can see the deal aggregate deal volume and exit volume in twenty twenty four for US and European deals. They're up twenty six and twenty seven percent year over year from twenty twenty three. And so we saw a nice rebound in terms of activity acting within the private equity industry. Below that in multiples, we did see a little bit of a rebound back in multiple expansion now up to twelve point two times average entry to enterprise value over even a multiple to to start, as a whole, which is up to about twenty percent year over year from from the low in twenty twenty three, which we have another slide. We can get to that in a in a second. There are certainly some macroeconomic, pressures that are happening within the industry. And so moving to the right chart, maybe starting up top, this is looking at the maturity wall of GPs who have unrealized private equity portfolio companies. And and the unrealized PE value is up on, over a hundred and sixty five percent from, from twenty eighteen to over six years. It it is up from one point three trillion to now three point five trillion of companies that are owned by private equity that are unrealized and at some point will need to be sold. Looking at the right chart, the investments over exits, this is the number of investments a private equity firm is making divided by the exits that they are having. And and so you can see that this number keeps going up, and then they're now at a peak in two point eight times, which is unsustainable at the end. They are investing more capital than you are exiting and realizing from your from your investments. At the bottom, we look at dry powder, and there has never been more dry powder to deploy in the private equity market than than there is today with and we broke it down by a few different buckets of looking at fund size. And so starting on the far right, whereas we have it boxed in there, it's looking at large funds, funds over one one to five billion or five billion plus. That's where eighty percent of the dry powder, the capital that has been raised in the private equity universe that hasn't yet been invested yet. And so eighty percent of the dry powder sits with these larger private equity firms versus then it shows for funds less than a billion in size how that that dry powder, the rest of the twenty twenty percent, kind of is is broken down. We think that is a great opportunity if you are investing in these lower mid market or mid market sized companies. There's a lot of capital up market if you can help grow and improve these companies to to ultimately sell to larger private equity firms. That's a huge exit route which we'll get to in a in a slide or two. So we thought we'd show a bit longer time period. The deal making did rebound in twenty twenty four. As I mentioned, you can see the it was up from twenty twenty three. The broader metric we've really been seeing is that it was kinda returned to normal. And so if you look from, back ten years in twenty fourteen, kind of back on that long term trend of of growing a little bit per year, outside of twenty twenty one, which was a banner year for for everybody involved. And there was a number of exit activity and a number of deal flows or deals that got done that year, but it is good to see that we're kind of back on that longer term trend in terms of just ultimate deals being done within the private equity industry. The next slide I'd say is probably at least or is more important. It's looking at just exits. And so looking back from twenty fourteen to to today, where where if you exclude twenty twenty one, looks like things are things are going well and things are really just back to to the historical averages at about eight hundred billion of of exit value per year. In twenty twenty four, it was about nine hundred billion, a little bit above above average. Twenty twenty one really does stand out on this chart as the outlier year. It was a phenomenal year in terms of exits, and it was a a great year to be selling companies as valuations were also at all time highs. But it's good to see that especially relative to twenty twenty three, which was the lowest year we've had in in a while, exit activity has picked back up. And so liquidity should hopefully have stabilized, returned to normal as a as a whole across the marketplace. We're now looking at the exit activity as a whole and how have those exits occur. And so the three main exit avenues that a private equity firm can take when selling their companies with the first being on the bottom in dark blue, a corporate acquisition. A a strategic company is acquiring this, as, typically a smaller company into m and a transaction as a whole where a strategic is buying the the buying a company. In light blue, a public listing, this is an IPO. This is when a company goes public on the public mark on the public markets. And and it isn't usually a huge avenue for exits. You can see on average, it's close to probably fifteen ish percent over the last ten years. The really thing that stands out here is twenty twenty and twenty twenty one. This was a drastic increase in the public listings of of companies on the private equity universe. So when they were exiting them, about a third were going public actually, which is a bit unused unusual. It's closer to the ten or fifteen ish percent on average. In twenty twenty four, thankfully, the IPO market opened back up a little bit. And so that in twenty two and twenty three, the two or three percent of the exit activity that went to the public markets increased back closer to average of of eleven ish percent, which is helpful, but you never never fully necessary for investing in in buyouts and growth equities. IPL markets being open is helpful, but not not necessary as as important that it is in some other other asset classes as a whole. And then where a lot of the the exits do occur are to other private equity firms, and that's in the the orange there in sponsor acquisitions. This is where one private equity firm sells the portfolio company to another private equity firm who hopefully can help continue to grow and, continue to expand that that company as a whole. And so you can see twenty four was was back. It was good to see a lot of strategic acquisitions and and the corporate acquisitions there in the dark blue. Some more public listings as well as the sponsor acquisitions handed back in in historical averages, as a as a whole. So we thought we'd touch on multiples and acts of what are the purchase prices paid for these companies. We broke it down by two two fold. One, just the debt over equity ratio, how much debt you are using to buy these companies in the dark blue on the bottom of each chart, as well as that how much equity contribution you are using to to, acquire these companies as a whole with the total multiple being on the top of each of those charts. And so you can see here that looking just at the US, twenty twenty two was the peak prices of where the the total enterprise value over EBITDA multiples were about twelve times as a whole. And those are roughly equally funded from equity and debt. So about half funded from debt, half funded from equity, and about six times each. In twenty twenty three, as interest rates started to rise, there was less debt available to these companies to invest in and and, and and so the debt the the debt over EBITDA ratios did drop from about six times to about five times in the last two years, removing one turn of debt availability. This flowed through to the ultimate purchase prices that private equity firms were acquiring companies at, going down from about twelve times in twenty twenty two to close to eleven times in twenty twenty three and twenty twenty four. Given where interest rates are today, we expect that level to continue where these companies are a little bit more overaccretized than they had been historically as interest rates are are still elevated from the kind of free money environment we were in in the in the last number of years pre twenty twenty three as a as a whole. And so we we think it's a sustainable level now of pain. We have reason about five times net debt over EBITDA at the market average as a whole and then paying roughly eleven times EV over EBITDA multiples for for companies as a as a whole. So they are certainly softer, largely just from the the increase in interest rates. And then we thought it'd be helpful to go into a bit more on our strategy where we think the most opportunity for the where the greatest opportunity for outperformance exists, which is in the middle market and really the lower end of the middle market as a whole. And so while private equity university is quite expansive, really focused on the middle market as a whole has really driven a lot of outperformance historically, which we'll we'll touch on in the next few slides. So first, why do we like the middle market as a whole? And so starting on the left hand side, this is looking at all US private companies with over five million of revenue. And so you can see about eighty five percent of all US private companies have between five and a hundred million of revenue. Moving to the right of the chart, the funds and the private equity firms that we speak can actually invest in these private in these companies is less than twenty percent. And we define that as fund that are less than one billion in in fund size. And so less than twenty percent of the capital is raised to invest in eighty five percent of the the companies. And so we like to do what, like, the great late, great Charlie Munger says is fish with a fish on. So we think the universe is massive and there's the least amount of capital really chasing this this universe, which leads to really compelling and opportunity. So then moving to the next slide, we thought we'd touch on some of the investment levers that exist within the middle market. And so firstly, is that often buying these smaller companies, you can acquire them at much attractive much more attractive entry prices. And this often can be driven from these are smaller companies that may have some complexity to them. You're often buying from founders or family management teams who own the companies who aren't necessarily driven by just maximizing the exit price itself. It could be really wanting to partner with a private equity firm to help take their take their company and help take it grow and expand it and and really improve it into into becoming a a better company and and have a second bite at the apple. Often that what that means is that a management team is often selling a portion of the company, a majority, maybe they're selling sixty percent of the company, but they are still gonna own forty percent of the company on a go forward basis. And they think that they can really expand that company enough where they will make more money on the second bite of the apple versus how much they made from the first sale if you partner with the right group then. And so you can acquire companies that have more attractive entry prices often. In the middle, we think there's more room to really create value at these companies. Often, they've done a phenomenal job growing and have created a great product or service that customers obviously value and are willing to pay for. But they've really done that just from just from from what they've known, and they they realize they maybe aren't necessarily created the most institutional or process oriented type of firms. And so private equity firms who have done this numerous times really know how to take a good company and make it a great company. Often, it can be by strengthening the existing management team to bring in some executives who they have a prior experience working with, taking companies from ten million of EBITDA to fifty, a hundred million of EBITDA as a whole and have have a proven track record or ability to do this. Otherwise, it can be as simple as implementing and tracking. Often these companies have grown to it that they are just by, just by their own kind of their own kind of bandwidth themselves and haven't really focused on tracking or implementing what is important, what really drives performance at the companies themselves, and then trying to track that for the first time. The the good a simple example that often kind of helps illustrate this point is most of these private equity firms, especially if they're family or founder owned, as a as a whole, don't have a dedicated or large dedicated outbound sales team. They don't have anybody picking up phones to to call potential new customers. They've historically grown just by answering the phones and the emails that we get by potential prospective customers. And so hiring dedicated sales staff can really help companies accelerate growth organically. And then in addition to all of that, primary firms have significant experience often helping accelerate the growth through, through accretive add on acquisitions. And this could be buying another tangential, offering that really expands into the service offering of the broader company itself. It could be expanding into a new market and offering a new geography, which should really help unlock some values. You can you can accelerate some things through some strategic accretive add on acquisitions. And then on the bottom, we think there's a which we've kind of touched on in the past is that there's a really attractive exit environment that that exists for these companies as there's more and more dry powders raised specifically for larger private equity firms. If you really can create the fodder for these large upper middle market or or large LBO firms to acquire these these platform acquisitions either as a platform for themselves or as an add on, you can sell for often much higher multiples as a whole. And there's a number of different private equity firms and strategics. You start getting interested in a company once it's reached a certain threshold or a certain size level as a whole. And then so don't just take our words for it. This is actual industry data to kind of back up that what what we're saying of why we think the middle market often yields the most advantageous entry prices. And so on the left here, we're looking at entry a EV over EBITDA multiple starting with the low market in the far left of companies less than two hundred and fifty million in enterprise value. On average, traded at less than eight times EV over EBITDA purchase prices. Moving to the middle market companies from two hundred fifty to one billion of enterprise value or closer to to twelve times, multiples. And then really to these large cap companies and large cap firms that have to acquire these larger companies, you know, they're trading on on average closer to thirteen times multiples as a whole. We do think small companies often there is reasons why they should trade at lower multiples. It is less competitive sales process. There is much more complexity operationally at these companies often. They could have significant customer concentration, product concentration, or less experience, weaker management teams as a whole. And so there is some reasons why these companies should trade at long multiples. But with private equity firms often and the ones we partner with are are great at is addressing these issues and really helping mitigate these risks so that once they go to sell the company, they can, one, be larger and, two, have addressed a lot of these kind of potential complexities or these these issues that other PE firms will have that should ultimately lead to selling it for a larger multiple upon exit as a as a whole than they acquired the these companies for. And then moving to the this next slide, we thought we'd touch on the major selection really is key to kind of capturing this outperformance. And so on the left, we show TVPI, IRR, and DPI, kind of the the metrics of how a fund has done broken down by three buckets of funds. Left and their billion on the far left, one to five billion in the middle, and then over five billion in large LBO mega cap kind of firms on the on the far right. And so as you can see, the funds less than a billion. The performance certainly is wider. The dispersion is higher. But on average, the median in the in the light blue there in the in the middle, maybe I'll just touch on TVPI, to to start. On average, these firms are generating a one eight MOIC or TVPI versus five over five billion firms that are generating less than a one point seven x. And so there's material outperformance. Just pick an average manager. Then if you're you are able to layer on some skill and some ability to really due diligence, find managers who are top quartile, the outperformance is is even more extreme with top quartile managers below one billion in front side generated a two point three x TVPI, while top quartile managers over five billion generated just about a two x TVPI. And so this significant outperformance ability, especially if you are able to select the managers who can really who can drive that that kind of outperformance as well as the downside to dispersion is not nearly as pronounced on, as you would would as we thought going into it with funds less than a billion. Bottom quartile managers are average generated a one point four x TVPI, while those over five billion are about a one point five x TVPI. And so certainly some more dispersion than, than larger groups, but not nearly as as much as it is to the to the upside, which really we think, especially if you can focus on and you have a dedicated team to invest in this market and and really find find groups that will hopefully be top quartile managers, focusing on groups less than a billion in in fund size or ones who can invest in the middle market or lower end of the middle market make a lot of sense and, generated some very strong returns for for investors. And that's that's all we we had. Hopefully, that was helpful on the Biot and Growth Equity universe.