Transaction costs. Due to the complexity of the transactions and the number of external experts required to be involved to complete each deal, such as lawyers and industry consultants, the transaction costs of private market transactions tend to be significantly higher than public markets.

The ability to control these costs will have an impact on the overall returns generated, despite private markets typically outperforming public market returns.

This is not always the case, and meaningful dispersion exists between returns within the same asset class. Deal structuring.

Each private market transaction will be different from any other and will rely on the expertise of the investor with regards to negotiating the terms structuring and executing the transaction.

VC funds will typically have more experience and skill in negotiating the terms and structuring a transaction than a private retail investor.

The more transactions conducted will create greater experience and expertise.

These factors can have big impact on returns through better deal pricing, improved financing rates, lower transaction costs, and better earnings from the investments.

Keeping a deal priced attractively, meaning a low valuation on entry coupled with lower transaction costs will benefit investors.

If it can also apply expertise to get an improved financing rate and also drive better earnings from the company, then it can expect to see a big impact on its return on investment.

The key to successful investments in the private sector is to unlock the value within the company and drive growth from it.

Complexity. The structure of a private market deal is often very complex, and the completion of deals is time consuming.

So it can take a dedicated investor or one with experience in private markets to be able to tackle such deals.