Private equity is a wrapper, not a strategy. Under the wrapper sit four families that share a legal structure and share almost nothing else about how they make money.
What are the main types of private equity?
Buyout funds acquire control of mature, cash-generative businesses, load them with debt at three to six times EBITDA, and underwrite a return built from operating improvement, debt paydown and, if the market cooperates, a higher exit multiple. The underwritten return is roughly 20% to 25% gross with a 2.0x to 2.5x multiple over four to six years, and the distribution of outcomes is comparatively tight because leverage on a stable business is a predictable machine.
Growth equity buys minority or control stakes in companies that already have revenue and often profit, uses little or no debt, and underwrites almost entirely on revenue and margin expansion. Konkan Growth Partners, the fund used in the Kaplan-Schoar worked example, is this family: four investments, one write-down, a 2.014x gross multiple.
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Venture capital funds a portfolio in which most positions are expected to fail. The arithmetic runs on a power law rather than on an average: a fund of twenty positions might see twelve write-offs, seven that roughly return capital, and one that returns the whole fund three times over. Venture underwriting is therefore not "what will this company be worth" but "if this company works, is it big enough to pay for the nineteen that did not". Everything from the venture-capital method through down rounds and anti-dilution follows from that sentence.
Secondaries buy existing limited-partner interests, or portfolios of them, from investors who want liquidity before a fund's term ends. The return here is underwritten on a discount to reported net asset value plus the shortening of the remaining hold, which is why a secondaries fund's internal rate of return often looks strong against a modest multiple.
Why does one blended return tell you so little?
A limited partner who owns all four and reports one blended number has told you nothing. The families do not share a risk driver, a hold period, a loss rate or a benchmark, and the reason the second half of this node spends so long on the public market equivalent is that it is the only measure that survives being applied across them.