There is a massive, multi-trillion dollar pool of unrealized value locked in private equity portfolios. This creates a significant demand for flexible capital providers who can offer liquidity solutions that are neither traditional debt nor control equity, such as preferred equity and other hybrid instruments.
In the competitive private markets, differentiation comes from more than just capital. Neuberger Berman leverages its large, multi-strategy platform, deep relationships with deal partners (not just capital markets teams), and a reputation for speed and certainty to source and win deals.
Lyon expresses a strong pet peeve for the investment community's obsession with Internal Rate of Return (IRR), arguing it's easily manipulated and incorrectly assumes capital can be redeployed at the same high rate. He advocates for focusing on the Multiple on Invested Capital (MOIC) and the actual compounding of money over time.
Neuberger Berman's alternatives platform, with ~$150 billion in AUM, fosters a collaborative culture across its various strategies (direct lending, secondaries, co-investments). This allows the firm to execute large, complex transactions ($700M+) by combining capital from different internal pockets, providing a significant advantage over siloed competitors.
Keep pulling the thread on David Lyon.