New Rules, New Playbook: What Growth in This Market Looks Like Now

Why It Matters

Private‑equity’s shift toward fundamental earnings growth and evergreen structures offers investors durable returns and diversification, but success now hinges on selecting managers who can navigate tighter liquidity and AI‑driven disruption.

Key Takeaways

• AI, deglobalization, consolidation, liquidity reshape private market growth
• Focus on market‑leading firms with strong unit economics
• Evergreen fund uses co‑investments and secondaries for diversified alpha
• Higher rates limit leverage; earnings growth now primary return driver
• Liquidity constraints boost continuation funds and mid‑life co‑investment opportunities

Summary

The interview explores how private‑market growth has entered a new regime marked by higher interest rates, tighter liquidity and lower tolerance for error. Gabrielton outlines four structural shifts—AI, deglobalization, consolidation and liquidity—that now dictate where capital flows and how value is created.

He emphasizes three mega‑trends for investment: foundational AI models and data infrastructure, AI enablement services and components, and defense‑space technology, while still targeting defensive sectors such as healthcare and business services. Good growth, he says, stems from market leadership, differentiated offerings, strong unit economics and sustainable profit generation, with earnings growth now the primary source of returns rather than financial engineering.

Key examples include the mantra “12 is the new 5,” indicating double‑digit earnings growth is required for comparable returns, and the rise of continuation funds and mid‑life co‑investments that address liquidity constraints. Successful AI adoption demands top‑down leadership buy‑in, talent recruitment and disciplined execution to translate into durable top‑line and margin expansion.

For investors, private equity remains a core source of long‑term alpha, offering diversification beyond concentrated public‑market winners. However, the widening performance gap between top‑quartile and bottom‑quartile funds underscores the importance of rigorous manager selection, cross‑cycle experience and a robust deal pipeline to capture growth in this evolving landscape.

Original Description

The era of easy wins in private equity is over. For years, low interest rates and cheap debt did the heavy lifting for returns—but in 2026, the playbook has been completely rewritten.

In this installment of Livewire's Growth Series, Anna Dadic sits down with Gabriel Ng, Managing Director at Neuberger Private Markets. Gabriel breaks down why "12 is the new 5," explaining that managers now need double-digit earnings growth to achieve the same returns that 5% used to deliver.

From the reality of AI implementation to the "liquidity crunch" creating new openings in secondaries and continuation funds, this interview unpacks and navigates the shifting landscape of private markets.

In this episode, we discuss:

- The Returns Equation: Why leverage and multiple expansion are out, and operational earnings growth is in.

- The "12 is the New 5" Rule: What it means for your portfolio expectations.

- AI—Hype vs. Reality: Where durable value is actually being created in data infrastructure and services.

- Strategic Growth Themes: Why Neuberger is backing Defense, Space Tech, and Healthcare.

- The Liquidity Gap: How "mid-life transactions" and GP-led secondaries are solving the exit problem.

- Manager Selection: Why the gap between top and bottom-quartile performers is set to widen.

Read the summary here: https://bit.ly/42nkyYT

Timecodes:

00:00 - Introduction

00:24 - Why 12% earnings growth is the new benchmark

01:37 - Moving beyond leverage: How returns are generated today

02:30 - Durable growth in AI

03:45 - True earnings growth versus financial engineering

05:49 - Liquidity solutions

08:04 - The strategy within an evergreen structure

09:54 - A broader and more diverse approach

10:46 - Where does PE sit in a portfolio?