In this edition of the ION Influencers Fireside Chat, Eric Deram, CEO and Managing Partner of Flexstone Partners explored where the asset management and private markets industry is heading. Drawing on over 35 years of experience across private equity, private credit, and fund management, Deram offered candid insights on industry bifurcation, succession risks, specialization, and the coming wave of consolidation.

1. From Leveraged Finance to Private Assets Leadership

Eric Deram began his career in leveraged finance at BNP Paribas, structuring debt for early buyout firms such as KKR, Carlyle, and Bain Capital. After roles in private equity and an MBA in the U.S., he founded his own advisory firm in Geneva in 2005, which was later acquired by Natixis Investment Managers in 2013.
Today, Flexstone Partners manages USD 12 billion in private assets across Paris, Geneva, New York, and Singapore, investing in private equity, private credit, and co-investments on behalf of institutional clients.

2. Industry Bifurcation: Giants vs. Specialists

Deram described a clear bifurcation emerging in asset management:

• On one side, mega-firms managing over $100 billion that blur the line between liquid and illiquid assets.

• On the other, smaller, specialized GPs — typically managing under $500 million — focused on niche strategies or regional markets.

“The big names have become true asset managers, not just illiquid managers,” Deram said. “Meanwhile, hundreds of small firms will continue to specialize and deliver strong alpha.”

He expects the industry to sustain 12–15% annual growth, though life will be “tough” for mid-sized managers stuck between these two ends.

3. The “Squeezed Middle” and Succession Challenges

Deram noted that mid-sized GPs are struggling to raise successor funds, especially in Europe and the U.S., citing succession failures and lack of differentiation.

“Those who haven’t solved succession or shown a unique value proposition simply won’t raise another fund,” he warned.

Some of these firms, he said, are shifting to deal-by-deal investing or quietly winding down. “There’s nothing to buy in a firm without succession — they just die.”

4. Specialization as the Key to Survival

Flexstone’s strategy centers on small and mid-market buyouts and sector specialization, particularly in healthcare, financial services, light industrials, and business services.

“The era of the generalist is over,” Deram asserted. “At the smaller end, you must have a clear, unique strategy — otherwise, fundraising becomes nearly impossible.”

He added that even large firms achieve specialization internally through sector-dedicated teams.

5. DPI and Liquidity: The Industry’s Pressing Issue

Discussing the distribution-to-paid-in (DPI) slowdown, Deram highlighted a sharp decline in distributions:

• Historically, investors received 20–25% of NAV back annually.

• In 2021, post-COVID, that spiked to ~34%.

• But in 2022–2024, distributions fell to 12–14%, less than half the historical norm.

“It’s a real issue,” he said. “Many LPs are overallocated and waiting for distributions before reinvesting.”

Still, Deram sees signs of improvement: “The first half of 2025 looks much better, and I’m optimistic about 2026.”

6. The Rise of Emerging Managers

Deram expressed strong support for emerging managers, describing them as hungry, entrepreneurial, and highly aligned.
Flexstone runs an emerging manager program for a major Australian superannuation fund, investing both in funds and co-investments.

“Emerging managers live or die by their first fund. That alignment of interest is powerful,” he said. “They often combine deal-making skills with deep sector experience.”

7. Alignment and Governance: Advice for New GPs

Deram cautioned that many firms fail due to poor economics and weak succession planning.

“Greed is a strong word, but too often 90% of the economics go to the founders,” he said.
He advised new GPs to share economics early and empower younger partners — “under adult supervision” — to build sustainable franchises.

8. NAV Financing and Continuation Vehicles

Deram remains skeptical of NAV loans, warning they can undermine the ring-fencing that protects LP assets.
However, he acknowledged that continuation vehicles (CVs) now represent about 50% of exits across the industry — a dramatic rise from near zero just five years ago.

“It’s a low-risk, high-return strategy,” he said, “but LPs rightly question whether CVs are real exits.”

He added that some GPs are combining trophy and underperforming assets in multi-asset CVs to manage older funds.

9. Evergreen Vehicles and the Talent War

Deram expects evergreen and permanent capital vehicles to grow in popularity, benefiting both managers and portfolio companies.
He also flagged an intensifying talent war, particularly in secondaries:

“Building a secondaries team in New York today is incredibly competitive — salaries are just crazy.”

10. Consolidation and the Road Ahead

Asked about industry consolidation, Deram forecasted the number of active GPs could shrink to 7,000–8,000 globally, from roughly 15,000 today.
He expects continuous M&A among fund-of-funds, co-investment, and secondaries managers, while niche alpha-generating specialists will continue to thrive.

11. Private Wealth and Retail Access on the Rise

Flexstone recently launched a retail private equity product in France via life insurance channels, raising €30 million within weeks.

“There’s strong appetite for private assets from retail investors,” Deram noted. “The private wealth channel will grow significantly.”

Key Takeaways

• The asset management industry is splitting between mega-firms and hyper-specialized boutiques.

• Succession planning and clear differentiation are critical for survival.

• DPI recovery is underway but remains a key constraint.

• Emerging managers and evergreen vehicles represent the next wave of innovation.

• Consolidation and talent competition will reshape private markets in the next decade.

Key timestamps:

00:07 Introduction to the Fireside Chat
02:12 Current Trends in Asset Management
04:38 Challenges for Mid-Sized Firms
08:04 Specialization in Private Equity and Credit
11:15 The Decline of Generalist Firms
12:09 Distribution Issues in Private Equity
14:14 Emerging Managers and Their Success Factors
18:39 Advice for Emerging Managers
21:36 Perception of Continuation Vehicles as Exits
23:07 Emergence of Evergreen Vehicles
24:24 Consolidation Trends in Asset Management
25:25 Growth in Private Wealth Channels
26:15 Future Discussions on Asset Management Trends