Freakonomics Radio 654. Is the Public Ready for Private Equity?
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Nov 21, 2025 
Elisabeth de Fontenay, a Duke Law professor specializing in corporate law, and Steven Kaplan, a finance expert from the University of Chicago, discuss the implications of new retail access to private equity. They explore whether this access is a genuine opportunity or a potential trap for everyday investors. Topics include the hidden risks of private markets, the performance history of buyouts, and the challenges faced by retail investors, including high fees and limited deal access. Can democratizing private equity truly benefit the average American?
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Private Markets Outperformed — Then Opened
- Private equity has outperformed public markets over decades but was historically closed to retail investors.
- The executive order aims to open private markets (crypto, real estate, private credit, private equity) to 401(k) investors.
Lawyer Turned Scholar From LBO Trenches
- Elisabeth de Fontenay described her M&A practice advising private equity from fund formation to leveraged buyouts.
- She relished the speed and sophistication but left after the financial crisis reshaped financing and workloads.
How Leveraged Buyouts Amplify Returns
- A leveraged buyout uses debt to amplify returns so equity owners can triple gains if value rises.
- Kaplan explained typical modern leverage is lower than the 1980s, making deals less likely to default.