Diana Sands: Kick us off with what you're thinking about in private equity. How has the market looked so far in 2026?

Bryn Gostin: Activity year-to-date has rebounded in terms of deals executed and exited. It's certainly not an exuberant market, but when you unpack the numbers, it's more a story of volume versus count: the marketplace is favoring larger transactions, which is probably a reflection of private equity maturing as an asset class and requiring deeper resourcing. That resourcing requirement exists across all three phases of the ownership cycle. On the buy, the deal cost index in 2026 is relatively high, so teams need much more insight and industry knowledge to develop a differentiated viewpoint and avoid overpaying. On the build, we've gone from a world where multiple expansion made up almost two-thirds of PE returns to less than ten percent today, so you need deeper value creation capabilities to drive private equity-like returns. And on the exit, it's a more structurally involved environment. You can't just show up to market with an asset and expect it to sell. You need to pressure test exit channels during the underwrite, spend time with the universe of likely buyers during ownership, and have the discipline to pull the trigger rather than wait for the last dollar of incremental value. It really goes beyond the capabilities of any one deal team. This is still a great asset class, but it is a more resource-intensive one.

Q: So we're in a healthier place, but still a challenging market. What are you hearing from LPs?

Bryn: It's healthier, but there's also a very large backlog to work through. I spend most of my time with institutional allocators, and the private equity allocators absolutely know there is a massive use case for this asset class. But interestingly, the conversation I'm having with many of them is: how do I make the case to my board, which may have less experience with the asset class, that private equity makes sense when the S&P 500 has had three rolling years of really strong returns? And I imagine it's a similar debate for individual investors: how do I think about the opportunity cost between the S&P 500 and any other risk asset?

Q: High level, the value proposition has not changed. What are clients looking for when they allocate to private equity? There are probably two big factors. The first is risk-adjusted returns: you are allocating to private equity looking for better risk-adjusted returns over a full market cycle, not the last three years, but over a cycle relative to public markets. The data substantiates that and continues to. The second is diversification. The public market has shrunk roughly in half, and concentration in a handful of names has increased over time. Ten years ago we had the FANG acronym; now we have the Magnificent Seven or Fabulous Five. This theme of concentration dominating public exposure has only continued. Private markets offer a wider aperture. Those two points of the value proposition remain fully intact. If anything, for that incremental dollar going to work, how do you find a point of value when markets are at or around all-time highs?

Bryn: Almost by definition, if you are putting a dollar to work in the S&P 500 today, you are top-ticking valuation momentum. Maybe the momentum trade continues, but that is what you are doing. When we look at private equity and public equity today, the earnings multiple spread is wider than it has ever been. On the other hand, contrary to popular belief, earnings growth has actually been relatively durable in private equity markets. If trends evolve as they tend to and we see some regression of the delta between S&P 500 and private equity multiples over time, and PE continues to deliver consistent earnings growth, you should expect a period of material outperformance of private equity compared to public equity.

Q: You've talked about the valuation delta: private markets relative to public markets; that gap has never been wider. Is now the moment to invest in private equity?

Bryn: I actually think we should start with whether this is even the right question to ask. The most sophisticated allocators to private equity do not ask it, because they know that vintage year risk is your single biggest risk when investing in the asset class. It is also very hard to just turn deployment on and off. The best way to capture the best vintage years is to deploy consistently and methodically over time.

That said, if we set that aside and look at the confluence of factors that have generated negative energy around private equity over the past four or five years, we've seen lower distributions, distribution yields going from around twenty percent down to closer to ten, and more muted returns versus public equity markets. All of that has led to some zombie funds that are unable to raise capital. The last time we saw that was during the financial crisis, and it set up for some very attractive go-forward years. There is good reason to believe we could be setting up for something similar.

If you're putting a dollar to work in the S&P 500 today, you are almost by definition top-ticking valuation momentum. On the other hand, the earnings multiple spread between private and public equity is wider than it has ever been. And contrary to popular belief, earnings growth in private equity has actually been relatively durable. If that delta between the S&P 500 and private equity multiples regresses over time as trends tend to, and PE continues to deliver consistent earnings growth, you should expect a period of material outperformance for private equity relative to public equity.

I would also double down on the concentration point. When you look at the Russell 3000, a pretty broad swath of the US economy, roughly 50 companies make up sixty percent of that index. Compare that to private markets: the top 50 companies would be less than ten percent of the universe, with no single exposure exceeding one percent. When you invest in private markets, you are almost by definition getting diversification and reducing concentration.

There is also an asymmetry to the return profile worth noting. Over rolling 10-year periods, the good decades look remarkably similar between public and private equity: both deliver roughly eighteen to twenty percent annualized returns. What is actually different is the downside volatility. In a bad decade for public equity, you can have what we think of as the lost decade, with zero or even negative returns. In private equity, those bad decades have historically looked more like nine to ten percent net returns. If I handed you an asset class without a name and said: if things go well, you will get eighteen percent; if things go poorly, you will get nine or ten, most investors should have some exposure to that.

Q: You have argued that some of the asymmetry in the return profile is a function of the structural advantages private markets offer. What are those?

Bryn: There are a few. The first, and maybe the most important, is access to quality management. It is much easier to get the alignment story right between a management team and the investor base in private markets, in part because of the incentive programs you can put in place. At Apollo, within our private equity business, when you get the management team right at both the C-suite level and that next layer of talent, it can fundamentally change a business from both a top and bottom line perspective. The second is change management. Public markets want stability, but sometimes to inflect growth, you first need to inflect change. And third, the resourcing capabilities are very different. Many of these companies are under-invested in, and established private equity can bring real resources to bear. There are often straightforward ways to make companies better: you buy a business in an industry where you know what best practice looks like, and then you put the resources in place to bring underperforming margins closer to industry-leading margins.

Q: Our chief economist Torsten Slok has articulated a constructive view of the forward trajectory of the US economy. We are constructive on growth, and yet interest rates are expected to be higher for longer, and inflation remains a pressure. How does that impact PE?

Bryn: I absolutely agree we remain constructive on growth. But the Federal Reserve has a tough job right now: balancing the hyperscaler AI economy on one hand with the more interest rate sensitive parts of the economy on the other, which are feeling more pressure, whether in autos, housing, or credit card spending. When we sit in our private equity investment committee, there are aspects of the economy that do feel very late cycle. In that environment, the type of private equity strategy that sets up well is probably one that is more value-oriented, but also has the ability to pivot into more distressed and dislocated investing if the cycle turns.

If we are late cycle, I want to be careful with too much deployment into high-growth, momentum-driven technology investments that tend to be more discount rate sensitive, especially as rates are expected to stay elevated. I would prefer strategies oriented toward free cash flow and operational value add, driven more by market alpha than market beta. By the same token, waiting to put everything into a distressed fund when the cycle turns is historically very difficult to time. What I really like today is some value orientation, less market beta, with the ability to pivot into dislocated opportunities should the cycle present them. That is probably a good place to be heading into the next several vintage years.

Q: Another point of discussion with investors is implementation, and specifically the choice between more traditional drawdown structures and newer evergreen portfolios. How do you think about those two structures and how they intersect with portfolio construction?

Bryn: They are two distinct structures with distinct purposes, and I think they can be quite complementary. Drawdown private equity is historically how institutions have gotten exposure. Essentially, it is a 10-year term: for the first four or five years, capital is called as investments are identified; then there is a period in which assets are matured; and then toward the back end, portfolio companies are sold, and cash is returned to investors. David Sambur, co-head of our private equity business, often says it is in some ways the simplest investment strategy of them all: buy a business well, make it better, and get more cash back to your investors at the end of the day.

A semi-liquid or evergreen is different. It is open-ended, meaning investors can subscribe on a periodic basis, usually monthly or quarterly, and can also redeem at regular intervals. For opportunistic corporate buyouts, assets and liabilities match much better in a drawdown structure. The assets are held for three to five years, but in an evergreen, investors can redeem on a periodic basis, creating a timing mismatch. The other consideration is time to deployment: in an evergreen, 100% of capital is called upfront, so if you are not deployed on day one, that capital sits in cash equivalents and creates drag on returns. That can push manager incentives toward timely deployment rather than patience and discipline. For opportunistic buyout, drawdown just works better because you can wait and find the right opportunity at the right point in the cycle.

By contrast, certain strategies work really well with evergreens, particularly those with more consistent cash flow profiles where capital can be put to work systematically. Private credit works really well. Secondary private equity, especially strategies focused on buying diversified portfolios of private equity interests, also works well in a semi-liquid construct, where you have a real ability to compound. I think increasingly our global client franchise will adopt both and use them in tandem to very productive effect.

Q: The other decision point clients face when evaluating evergreen versus drawdown is liquidity. What does that difference actually look like in practice?

Bryn: When I talk to clients about evergreen liquidity, I try to frame it around two different types. The first is rebalancing liquidity: the strategy has done well, maybe you want diversification elsewhere, and these evergreen structures are terrific for exactly that use case. What is not necessarily going to be there is liquidity during a dislocation, whether specific to the fund or broader from a macro perspective. In that environment, you will probably have to wait some period of time to get your capital back. But I would stress: that is always the case with almost any risk asset. Unless you are keeping your money in cash, consider the S&P 500. Technically, you can redeem any trading day of the year, but if markets are down thirty or forty percent, it is probably not a great idea.

Q: Thinking about where we are: later in the economic cycle, public market valuations at all-time highs, the delta between public and private valuations very wide, costs higher. What is top of mind for the private equity team today, and how is this informing where you are finding opportunity?

Bryn: Our private equity business really tries not to fall into the trap of saying we believe X theme is interesting so we are going to go buy X. When you do that in private equity buyout, you become a hammer running after a nail: you find a nail, you do not even evaluate whether it is a good nail. By design, our strategy is opportunistic and flexible, which does not mean we do not have themes, but it means we are trying to build very deep industry expertise, develop investable themes from that, form lasting and partnership-oriented relationships within our industries, and then be patient and wait for the right time in the cycle and the right set of facts and circumstances around a specific company. That is a big part of why we have only ever raised one buyout flagship strategy. We do not want lots of different funds, because that pushes you into a corner and forces you to operate based on themes within specific sectors rather than finding value wherever it shows up on the globe or across sectors.

If I had to name one theme today, it is bringing AI and technological innovation to older economy companies. Those are exactly the types of companies with the potential to be the biggest beneficiaries of new technology. A typical computer science graduate from a top university is starting their own company or joining the next tech darling. They are probably not going to work for a logistics business or a manufacturing plant. But if you can bring that kind of resource and capability to bear at those companies, you have the ability to unlock some genuinely transformative ideas.

Note: This transcript has been lightly edited to remove filler and tighten repetition while preserving both speakers' voices. It does not represent a verbatim transcript of the podcast. Podcast recorded on September 22, 2026.