The Truth Behind Private Equity’s Megaboom - The Compound and Friends

Transcript

Josh Brown (0:00)

Where do you live?

Michael Sidjimore (0:01)

Between D.C. and here.

Josh Brown (0:03)

Okay.

Michael Sidjimore (0:04)

I split my time.

Josh Brown (0:05)

Where. Where are you more often?

Michael Sidjimore (0:06)

Here. I'm here pretty much. Our office is three blocks up from you.

Josh Brown (0:10)

So why are you also in dc?

Michael Sidjimore (0:11)

That's where I built the home podcast studio when I started AGM during COVID.

Josh Brown (0:15)

You know you can move the microphones.

Michael Sidjimore (0:17)

I could. I could. You know, I know I could move the microphones. It is. It's a cool background though, so it's hard to.

Josh Brown (0:23)

So I listened. I listened to your show and I really liked it. And I know it's very long running. You've done a ton of episodes.

Nicole (0:29)

He caught one, but he caught one.

Josh Brown (0:31)

No, you're. Dude, you're. You can do it. You're good. You're good.

Michael Sidjimore (0:34)

Appreciate it. Yeah, it's good to hear from another podcast.

Nicole (0:36)

I thought that this episode was just gonna be. I thought I was gonna be in this seat. Josh was not supposed to be here, so I invited you.

Josh Brown (0:43)

Well, surprise, surprise.

Nicole (0:45)

So I invited you and somebody who canceled 24 hours ago.

Josh Brown (0:50)

Dead to us. Right, Nicole?

Nicole (0:52)

And I'm not gonna name companies. I'm not gonna name names. I'm not gonna do it. No, I'm not gonna do it. But let's just say it rhymes with.

Josh Brown (0:58)

Stop, stop, stop, stop, stop, stop.

Summary

The Compound and Friends – Episode Summary

Podcast: The Compound and Friends
Episode: The Truth Behind Private Equity’s Megaboom
Date: September 5, 2025
Host(s): Josh Brown, Nicole, Michael Batnick
Guest: Michael Sidgimore (Partner and Co-founder of Broadhaven Ventures, Host of “Alt Goes Mainstream”)

Overview

This episode dives deep into the explosive growth of the private equity and private credit markets, often referred to as “alts,” and unpacks the nuanced shift of these asset classes from traditional institutional investors to the broader “Wealth Channel.” Josh Brown and Nicole interview alternative investing expert Michael Sidgimore about the scale, business models, investor concerns, and cultural dynamics driving this megaboom. The conversation balances honest skepticism with industry insights, aiming to demystify terms and trends for advisors and investors navigating this evolving landscape.

Key Discussion Points & Insights

1. Origins, Trends, and Definitions in Private Markets

(11:32 — 20:16)

Private markets have exploded to roughly $25 trillion in assets under management (“alts” includes private equity, private credit, hedge funds, infrastructure, real estate, etc.).

“About 25 trillion of assets in alternatives or private markets. … Private equity is the biggest asset class.”
– Michael Sidgimore (12:44)
A notable shift: Institutional allocations to alts (~15-20%) have plateaued, pushing managers to target private wealth as the next major capital source.

“Institutional investors have reached a point where they’re relatively fully out… We need a new buyer. Hey, we’re super interested in democratizing this for wealth management.”
– Josh Brown (14:23)
There’s healthy skepticism: Is “democratization” driven by access—or by managers needing new capital?

“Let’s put that aside, the cynical aspect aside for a second…”
– Michael Sidgimore (15:13)
Private Wealth Channel: Currently massively underallocated to alts (only 1-3% vs. 15-20% in institutions), signaling room for significant growth.

2. The Wealth Channel: Business Models & Advisor Adoption

(20:17 — 28:49)

The cultural divide between traditional wirehouse advisors (performance-driven, experienced with alternative products) and RIA advisors (planning-focused) shapes adoption patterns.

“Wirehouse guys… were typically selling performance. So it’s just a very different mentality.”
– Nicole (21:23)
Most of the alternative flows today come from a small segment:

“There’s 10% of the advisors doing 90% of the flows.”
– Michael Sidgimore (20:17)
Private equity investment in RIAs changes incentives:

“Private equity investing into wealth management is part of this.”
– Michael Sidgimore (23:56)
Smoother performance reporting (quarterly “marks” instead of daily) is attractive for wealth managers, but can also obscure volatility:

“Cliff Asness calls this volatility laundering… the private equity manager gets to skate through a lot of [drawdowns]...”
– Josh Brown (26:03)

3. Products & Access: Evergreen, Interval, and Tender Offer Funds

(28:49 — 39:02)

Traditional PE/credit funds have illiquid, closed-end, drawdown structures (10+ year commitment, capital called over multiple years).
- Evergreen/Interval/Tender Offer funds have emerged as the preferred “Wealth Channel” solutions—allowing ongoing subscriptions and periodic (albeit limited) withdrawals, better fitting individual investors’ needs.
  
  “Evergreen funds are… continuous ability to invest… ability to withdraw capital… the firm needs to have enough deal flow…”
  – Michael Sidgimore (30:28)
Technology platforms (e.g., iCapital) have professionalized and streamlined advisor/private investor access.

“The market structure needed to be built… Just like the pipes and plumbing of equities, fixed income, derivatives needed to be built… Private markets is obviously much younger…”
– Michael Sidgimore (35:33)

4. Alts as Market Necessity: Opportunities and Growing Pains

(39:02 — 52:22)

Private equity opens investing to a vast universe of companies otherwise inaccessible to public-market investors.

“87% of companies in the US with $100 million in revenue or greater are private.”
– Michael Sidgimore (39:58)
Private credit is especially compelling due to structural changes:
- Regulations have pushed banks out of lending to middle-market companies, giving rise to huge direct lending opportunities for private credit funds.
“Banks were regulated out of… in stepped these Blackstones… this part of the market banks were regulated out of.”
– Nicole (39:37)
Explosive growth and yield stories spark concerns about excesses (“too much money chasing too few deals”), deteriorating loan covenants, and potentially riskier portfolios:

“Is there too much money chasing too few deals where the terms are getting shittier… it’s the easiest thing in the world to sell is 12% income returns and they’re steady and there’s no volatility.”
– Nicole (41:53) “There’s an increase in pick coverage… All those things are a cause for concern for the private credit industry.”
– Michael Sidgimore (42:54)
The line between private credit, private equity, and traditional lending is blurring; scale is a key competitive advantage.

“Scale is their advantage as a firm because scale begets skill.”
– Michael Sidgimore on Blackstone (56:02)

5. Industry Structure: Consolidation and Brand Wars

(52:22 — 57:38)

The “Alts” industry is fragmenting and consolidating at once:
- Huge asset managers (Blackstone, BlackRock, Apollo, Ares, KKR, Carlyle) are swallowing up market share via capability, scale, and distribution innovation.
- Traditional managers (T. Rowe, BlackRock, Franklin) are pushing deeper into private markets—sometimes through joint ventures (eg. T. Rowe Price & Goldman Sachs).
“BlackRock has always had a foot in private markets… but that’s not who we are anymore…”
– Nicole quoting Larry Fink (49:32)
For advisors, brand and perceived stability/reputation are paramount.

“I gotta be honest… it’s what is a big enough name that when I say it to my clients, they’re not afraid anymore, and what’s the price. The branding culture shit—nobody cares.”
– Josh Brown (52:22)

6. Secondaries and Illiquid Markets: The Next Frontier

(59:05 — 61:39)

Secondaries (the marketplace for buying interests in existing private funds/companies) solve for liquidity and are seeing huge growth, especially with mega-unicorn private companies (e.g., OpenAI).
Access for average investors remains limited; even many advisors struggle to participate except through new semi-liquid structures.

“That part is—the market is still not built out for the everyday investor. Not even close. … And it’s a pain in the ass.”
– Nicole (61:29) “That’s why I think this is going to be advisor led for a while, as it should be.”
– Michael Sidgimore (61:41)

7. The Culture of Private Equity: Stereotypes, Realities, and Brand Building

(62:12 — 71:25)

The “douchiness” associated with private equity is partly overblown, partly true, and definitely memeable.

“Do you know who Johnny Hillbrandt is? … All his videos are like, I’m in Nantucket now, I’m in the Hamptons now...”
– Josh Brown (65:01) “I think there’s a lot of people in the industry who are not like that…. those focused on the Wealth Channel… are business builders.”
– Michael Sidgimore (68:20)
Asset managers must elevate their authentic brand while connecting at a cultural level with advisors, especially as memes and social media accelerate finance’s culture collision.

“We’ve gone through the memeification of everything… I think they need to realize and think through how they want to work with the wealth channel that might be different…”
– Michael Sidgimore (68:20) “Private equity and private markets don’t work unless the returns are higher than public markets. Why do it?”
– Michael Sidgimore (69:48)

Notable Quotes & Memorable Moments

On the big shift:

“The era of three basis points Vanguard, you don’t need anything else—like, I don’t think everyone has accepted that that investing era is over and we’re in a new era.”
– Josh Brown (04:35)
On private credit risk:

“Is there too much money chasing too few deals where the terms are getting shittier because there is just a torrent of capital? … The easiest thing in the world to sell is 12% income returns and they’re steady and there’s no volatility. Is that the danger?”
– Nicole (41:53)
On democratization—or just finding new clients:

“When I hear that stat [institutions are maxed out], I hear it cynically, I hear it like the institutions can’t physically buy any more of this stuff. We need a new buyer…”
– Josh Brown (14:23)
On “volatility laundering”:

“Cliff Asness calls this volatility laundering and he flies into a rage over this… the private equity manager gets to skate through a lot of that, unless it’s a sustained drawdown.”
– Josh Brown (26:03)
On “scale begets skill”:

“Scale is their advantage as a firm… That’s why I think they’ve leaned so hard into scale.”
– Michael Sidgimore on Blackstone (56:02)
On brand and advisor choice:

“I gotta be honest… it’s what is a big enough name that when I say it to my clients, they’re not afraid anymore, and what’s the price. The branding culture shit—nobody cares.”
– Josh Brown (52:22)
On the asset class’s test:

“Private equity and private markets don’t work unless the returns are higher than public markets. Why do it?”
– Michael Sidgimore (69:48)

Timestamps for Key Segments

Intro/social banter: 00:00-07:46 (skip)
Private markets size, institutional/wealth shift: 12:44-20:16
Advisor adoption, wirehouse vs RIA culture: 20:17-23:56
Private equity in RIA business, marking and volatility issues: 23:56-28:49
Evergreen, interval, tender-offer funds & tech platforms: 28:49-39:02
Private company/credit market structure: 39:02-52:22
Big asset manager partnerships, consolidation, branding: 48:25-57:38
Secondaries evolution and access: 59:05-61:39
Private equity “culture” and memes: 62:12-71:25

Takeaways

Private equity and private credit are entering a new era—moving from a niche institutional playground to being integrated into wealth management, with profound impact on portfolio construction, advisor business models, and industry culture.
The boom brings real opportunity for investors to access vast new parts of the global economy—but everyone, from investors to advisors, needs greater education and must carefully weigh risks, manager selection, and structural fit.
Branding, authenticity, scale, and distribution are increasingly as important as the underlying investments. Advisors and clients will be both the battleground and beneficiary as this evolution plays out.

How to Learn More:

Michael Sidgimore’s podcast & substack: Alt Goes Mainstream
Follow Josh Brown & Nicole for real-time takes on finance, investing, and advisor challenges.

(Summary captures all major topics and tone, skipping ads and boilerplate. For exact speaker quotes & context, please refer to timestamps above.)