The Capital Ledger · Edition 07 · 6-minute read
Last edition asked what capital needs to see before it says yes. As 2026 winds down, the answer keeps coming back to one thing: time.
At today’s pace, it would take private equity more than eight years to sell the companies it already owns. Funds raised in 2022 have returned about 10 cents in cash for every dollar investors put in.
When the wait gets that long, cash back becomes the scorecard: for asset managers, for the banks that finance small businesses, and for anyone deciding where their own money should go.
So the question running through this edition is simple: what earns an investor’s patience?
Hit reply and tell us your answer. We read every response, and the best ones shape what we cover next.
IN THIS EDITION
Up Next in the Capital Briefing Lineup
The Backlog Becomes a Market
The Show-Me Period
Scale Is the Strategy
The Watchlist
The Allocation Job
THE CAPITAL BRIEFING SERIES
Monthly briefings. Members only.
Nov. 12 | Ownership Transitions: The ETA & Succession Window. A generation of business owners is getting ready to sell, and most of those companies will change hands privately. Keith Spears walks through how these deals really come together, and where buyers win or lose them.
Dec. 2 | What Institutional Capital Requires. Three people from the allocator side of the table on what they need to see before they commit: Taffi Ayodele (Office of the NYC Comptroller), Dee Sharma, CFA (Northern Trust Asset Management) and Donna Snider, CFA (Hackensack Meridian Health). Moderated by Emmanuel Esochaghi of VeraDaniel & Company.
Every briefing puts you in the room with the people making the calls, and alongside peers building something of their own. You hear how decisions really get made, ask your own questions, and leave knowing who else was listening.
Members join live and can watch every replay in ATLAS. If you want a seat, it starts with an invitation.
All briefings are informational programming. No session constitutes an offer, solicitation, investment advice, or capital introduction.
THE SIGNAL
Where Capital Went. Where It Didn't.
The Backlog Becomes a Market
Private equity has a cash problem. Europe alone holds a record 14,803 PE-backed companies, and more than one in ten has been owned for nine years or longer.
So sponsors are getting creative. Continuation vehicles, which move a company from an old fund into a new one, handled $65 billion in the first half of 2026, up 35%, and were roughly one in five sponsor-backed exits in 2025. The newer move is selling a minority stake in a company the sponsor still owns. At Schroders Capital, close to a third of recent co-investments work this way.
What it means: if you're offered one of these deals, you're often paying more than the sponsor did, for less information. Ask first: is this money funding a plan, or covering a gap? And if you're the manager, remember that LPs keep score of who sent cash back and who rolled it forward.
Sources: PitchBook News; White & Case via Harvard Law School Forum on Corporate Governance (citing Evercore, KPMG), Oct. 2026
The Show-Me Period
LPs are still writing checks. They just want proof first.
In a summer survey of 32 NAIC firms, 63% said LPs are pushing harder for cash back, and 42% called time to close their biggest fundraising problem. Re-ups were the surest path to a close.
5th Century Partners shows how it's done: a $144 million Fund I in 2022, seeded by a Chicago family office, then a $276 million Fund II this year. Its advice: start talking to LPs 18 to 24 months before you need them.
Others skip the blind pool and build a record one deal at a time. Independent sponsors posted a median 23.8% IRR, ahead of comparable buyout funds, according to PitchBook.
What it means: a strong deck opens the meeting; a track record and returned cash close it. Public pension emerging manager programs generally cover Funds I through III, with caps of roughly $500 million to $2 billion.
Sources: NAIC Market Pulse, Sept. 2026; PitchBook, July 2026; public pension program documents
Scale Is the Strategy
Banks run on the same clock. The country's 155 minority depository institutions (MDIs) earned a record $4.95 billion last year, up 12.4%, according to the National Bankers Association.
But size splits the results. Nearly all MDIs above $1 billion in assets (98%) were profitable, versus 81% of those under $400 million. That's why 54% of their executives are weighing a merger, and Optus Bank and Mechanics & Farmers Bank have already agreed to one.
They also punch above their weight: over five years, 98 MDIs made about 9% of all SBA loan dollars, despite being 3.7% of U.S. banks.
What it means: if you're buying a small business, your lender's balance sheet is part of your deal. A bigger, healthier community bank can carry a bigger loan. Know who's on the other side of your financing.
Source: National Bankers Association, 2026 State of MDIs Report (FDIC data)
What matters most before you commit to a manager?
THE WATCHLIST
CAPITAL MARKET BRIEFS · THE INTERVIEW
Private Markets at Every Wealth Level, with Jeffrey Malone, CFP
Companies are staying private longer, and more of the growth now happens before anyone can buy a share. So who gets in, and what does it take?
Jeffrey Malone, CFP and founder of Malone Financial, joins our host, Tariq Collins, on Capital Market Briefs to explain how private markets really work, how the accredited investor rule decides who gets access, and what a sensible allocation looks like at every wealth level, from $100K to $10M and beyond. He also shares where he's leaning in right now, and where he's staying away.
Educational content only. Views are the guest's own and are not investment advice.
NEW THIS WEEK
Capital Market Briefs is back every week with what's moving in the market.
Starting this week, it has company: Deal Makers Desk, a new CAN Media original where host Devante Johnson walks through how a real deal got done, step by step. The first episode drops Wednesday, Nov. 4.
THE ALLOCATION JOB
Private Credit: Lower Middle Market Lending
One strategy. What it is built to do, and what it is not.
If cash returned is the new scorecard, this is the strategy built to deliver it earliest.
The job it does
Lower middle market lenders make senior secured, typically floating-rate loans to companies too small for the syndicated loan market. Returns come from interest and fees, not exit multiples.
Duration and cash profile
Credit returns cash earlier than equity.
Fund vintage | Private debt | Private equity |
|---|---|---|
2019 | 0.73x | 0.51x |
2020 | 0.64x | 0.29x |
2021 | 0.43x | 0.21x |
2022 | 0.37x | 0.10x |
Pooled distributions to paid-in capital, global, as of Dec. 31, 2025.
What has to go right
Underwriting and workouts. Returns are capped at the coupon; losses are not.
Manager selection. Among 2023-vintage funds, the top decile returned a 17.39% IRR and the bottom decile 5.77%.
Questions to ask the GP
What share of the book is senior first-lien, and what was leverage at entry?
What is your realized loss rate, and how have workouts gone?
What is DPI by fund, not just IRR?
Who it's wrong for
Investors seeking equity-like upside. The return ceiling is the contract.
Investors who need liquidity on demand.
Where it sits on the ladder
Above public high yield, below private equity. Income first, not a substitute for growth.
PitchBook data covers private debt of all deal sizes. Sources: PitchBook Q4 2025 Benchmarks; Q2 2026 Private Capital Indexes. Educational only; not investment advice. Past performance is not indicative of future results.
FROM CAN
The back office is part of the pitch.
LPs underwrite the firm as well as the strategy: the model, the reporting, the forecast behind the fund. CAN's Fractional Execution Team gives emerging managers and operators senior finance capacity at institutional standard, without a full-time finance hire.
FP&A: budgeting, forecasting and management-company planning.
Financial modeling: fund, deal and operating models built for institutional diligence.
Execution support: senior finance hands for the work that has to get done between raises.
Want a second set of eyes first? Reply “READY” and we’ll set up a 15-minute readiness call.
The Fractional Execution Team provides financial planning and modeling support only. It does not provide investment advice, placement, or capital-raising services.
Coming soon: CAN Media Studio
Every firm has a story. Few tell it well. The team behind CAN TV and The Capital Ledger will soon produce for members: firm films, founder interviews and thought leadership.
Reply “MEDIA” and we’ll reach out when it opens.
JOIN THE NETWORK
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A Final Note
Play the long game, not the wrong game.
Capital compounds. Relationships compound. Reputation compounds. Everything that lasts in this business is built slowly, on purpose, with people who show up the same way every time.
That's what CAN is. That's what we're building.
Until next edition,
The Capital Ledger
Published by The Capital Alliance Network
The Capital Ledger is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any security or investment product. The Capital Alliance Network is not a broker-dealer, placement agent, or registered investment advisor. References to third-party data, reports, and market activity are drawn from public sources and provided for educational purposes only. All programming referenced herein, including the Capital Briefing Series, is informational and does not constitute an offer, solicitation, or capital introduction.
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