The Asante Edge Podcast – Backing Emerging Managers – A Deal-by-Deal Approach
Elizabeth Egan
Executive Director, Private Markets
Elizabeth Egan, Executive Director, Private Markets at TIFF Investment Management, joined The Asante EdgePodcast with Asante Partner Kelly Phelan to discuss how TIFF has built a long-term program backing independent sponsors, focusing on areas of the market “where scale can’t go,” and to share advice for GPs navigating the move from independent sponsor to funded model.
Key takeaways from the conversation:
Inefficiency persists in the lower middle market, and that’s precisely where independent sponsors are finding opportunity. By focusing on segments where larger capital cannot operate effectively, investors can access deals that remain underserved and attractively priced.
Deal-by-deal investing, when done well, creates meaningful alignment between sponsors and capital partners. These early partnerships often form the foundation for durable, long-term relationships as sponsors mature.
What separates managers who can build a platform from those who cannot comes down to mindset and intentionality. As Elizabeth puts it: “Think of yourself as a business builder. You are an entrepreneur, you’re not just doing deals. You are building a business.”
Disclaimer: Elizabeth Egan is an Executive Director, Private Markets at TIFF Investment Management. All views expressed by her on this podcast are solely her opinions and do not reflect the opinions of TIFF. You should not treat any opinions expressed by Elizabeth as a specific endorsement to make a particular investment. References to any securities are for informational purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Any past performance discussed is not indicative of future results. Please keep in mind that investment in a fund entails a high degree of risk, including the risk of loss. Please note that the ads featured in this podcast are not endorsed by TIFF, and TIFF is not a sponsor of these ads.
The Asante Edge is hosted by Kelly Phelan, a Partner at Asante Capital Group, a placement agent focused on connecting private equity managers with institutional investors globally.
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. There is no guarantee that any particular asset allocation or mix of strategies will meet your investment objectives.
The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. These materials also do not constitute investment, legal or tax advice. Opinions expressed herein are those of TIFF and are not a recommendation to buy or sell any securities.
These materials may contain forward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.
TIFF assets under management (AUM) is as of 9/30/25 and includes discretionary and non-discretionary client assets for which TIFF affiliates provide investment management or advisory services. The private markets portion of TIFF AUM is calculated based upon fund net asset value plus unfunded commitments. Calculation of TIFF AUM differs from the calculation of regulatory assets under management in TIFF’s Form ADV filings with the SEC and may differ from the AUM calculation methodologies used by other investment managers.
PE exits are reopening. Liquidity is returning after a prolonged slowdown, with 2025 marking a meaningful step forward in overall exit activity.
Rebound is material but concentrated. Mega-exits have accounted for an outsized share of recovery value, but exit count is also steadily increasing.
Middle market is showing balanced recovery. Recovery is driven through sustained growth in both exit count and value, suggesting a more durable return of transactions compared to the top end of the market.
Lower middle market managers are winning through discipline. In this new environment, strong outcomes are being driven less by financial engineering and more by patient realizations, operational execution, and active ownership.
More Than Green Shoots: Exits Return to U.S. Private Equity
Exit activity is showing encouraging signs of recovery, with 2025 marking a reacceleration in both deal count and value. As buyer-seller expectations begin to converge,1 a greater number of transactions have come to market. In 2025, exit activity showed a meaningful rebound with a 17% increase in total deal count and a 90% increase in total exit value from 2024,2 signaling a reopening of liquidity. Notably, this recovery occurred despite a period of disruption in the second quarter, when market volatility and macro uncertainty, including policy-related events and a government shutdown, temporarily slowed activity.
This return follows a period of dislocation. In 2021, U.S. PE exit activity reached an all-time high. Following COVID-related delays, the surge was driven by exceptionally favorable market conditions like abundant liquidity, strong public valuations, and a backlog of assets ready for sale. As financing tightened and valuation expectations reset, exit activity slowed over the next two years, with many sponsors opting to hold assets rather than transact at lower multiples.
U.S. PE Exit Activity (Q4 2025)
Source: Pitchbook 2025 Annual U.S. PE Breakdown Summary.
While 2025 marked a meaningful step forward, there is a caveat. According to Pitchbook, 78% of total exit value was accounted for by mega-exits.3 These larger transactions have driven a significant share of the recovery (and of headlines) but, lost in the narrative, there has been a broader, more gradual recovery in the middle market.4
The Middle Market Is Driving a More Durable Exit Recovery
Emerging data points indicate that recovery dynamics are not uniform: Smaller segments of the market are exhibiting more balanced recovery. Activity in the middle market exhibits steady improvement, with exit count and value increasing by 11.6% and 5.6% YoY, respectively.5 Moreover, both exit count and value have increased for the second consecutive year and now surpass pre-pandemic averages for the first time since 2021. This double-digit growth in transaction volume indicates that active deal flow is returning more broadly. As pricing expectations normalize and buyers re-engage, exits in the middle market appear less dependent on episodic liquidity events and more reflective of underlying transaction demand.
U.S. PE Middle-Market Exit Activity(Q4 2025)
Source: Pitchbook 2025 Annual PE Middle Market Report Summary.
Value Creation Over Timing: How the Lower Middle Market (LMM) Is Driving Outcomes
Anecdotal commentary from our own partners provides further perspective on current trends and dynamics in the lower middle market. Their commentary suggests a similar pattern of moderate and nuanced recovery. While overall sentiment remains cautiously optimistic, a few actionable themes emerged from our conversations and research:
Discipline Over Liquidity: LMM managers remain disciplined on exit timing, with realizations occurring selectively as buyer-seller alignment improves, rather than relying on continuation vehicles or other engineered liquidity solutions.
Fundamentals Are Driving Outcomes: Returns are increasingly driven by operational execution and earnings growth, with one manager noting that the current environment “rewards firms that generate returns through fundamental business improvement rather than reliance on favorable market conditions.”
Where Active Ownership Wins: Managers emphasize the ability to drive outcomes through hands-on ownership and sector specialization, with the LMM favoring investors “willing to roll up their sleeves and do the groundwork” in fragmented, recurring-revenue businesses.
A Shift Toward Fundamentals Favors the Lower Middle Market
While remaining cautiously optimistic, LMM managers appear particularly well positioned to capitalize on an exit environment increasingly defined by disciplined underwriting, fundamentals-driven returns, and selective buyer demand. EY reports that 73% of PE firms expect exit activity to increase in 2026, the highest reading since the survey began in 2023, while 79% anticipate a pickup in acquisitions.6 Their expectations are fueled by shifts towards more disciplined entry pricing, more conservative capital structures, and a renewed emphasis on operational value creation.
These shifts are particularly constructive for the lower middle market, where these characteristics are not just cyclical adjustments but long-standing features of the segment. Unlike larger-cap strategies that have historically relied more heavily on multiple expansion and financial engineering, LMM investing has consistently been driven by earnings growth, operational improvement, and hands-on ownership. As returns across private equity become more dependent on these levers, the LMM is structurally aligned with the direction of the market rather than adapting to it.
At the same time, improving acquisition appetite and selective buyer demand reinforce the LMM’s exit pathways. Scaled LMM platforms, particularly those with demonstrated operational progress and defensible unit economics, remain attractive to both strategic buyers and larger sponsors seeking platform expansion. As capital increasingly concentrates around high-quality assets, this dynamic should support consistent exit opportunities for well-positioned LMM companies.
Conclusion
Exit activity in private equity has begun to recover, with 2024 and 2025 marking a clear re-opening of liquidity across the market after a period of below average exit activity. While a few large transactions have grabbed headlines, this masks a more consistent and sustained improvement within the middle market. In particular, the middle market is demonstrating steady gains in transaction activity, supported by a re-engagement of buyers and more disciplined realization behavior. Anecdotal commentary from our lower middle market managers suggests this steady recovery extends to that part of the market as well.
At the same time, the drivers of successful exits are evolving. In contrast to prior cycles that benefited from multiple expansion and favorable financing conditions, current outcomes are increasingly tied to operational performance, earnings growth, and active ownership. This shift favors segments of the market, particularly the lower middle market, that have historically relied on these levers rather than adapting to them.
While near-term exit activity may continue to fluctuate, the evidence suggests that the market is not constrained by a lack of exit opportunities but rather is undergoing a transition toward a more fundamentals-driven environment. As this shift continues, investors positioned with managers capable of executing in this context may be better placed to achieve more consistent liquidity outcomes over time.
The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. These materials also do not constitute an offer or advertisement of TIFF’s investment advisory services or investment, legal or tax advice. Opinions expressed herein are those of TIFF and are not a recommendation to buy or sell any securities.
These materials may contain forward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.
Footnotes
McKinsey & Company. “Global Private Markets Report 2024: Private Markets in a Slower Era.” Feb. 2026.
Pitchbook. “2025 Annual U.S. PE Breakdown – PitchBook.” 14 Jan. 2026.
Pitchbook. “2025 Annual US PE Breakdown – PitchBook.” 14 Jan. 2026.
Previously the COO and Managing Director at Columbia University’s endowment, Mercado will lead key operational teams, elevating both the investment and client experience.
Radnor, PA – April 16, 2026 – TIFF Investment Management, an independent, employee-owned investment firm specializing in OCIO services and alternative investment strategies, announced today that Julius Mercado, the former COO and Managing Director at Columbia University’s endowment, has joined TIFF as Executive Director and Head of Operations, Reporting, and Data.
In this role, Mercado will lead investment and fund operations, portfolio reporting, and data and analytics. He will oversee TIFF’s investment and client platforms, strengthening the quality, consistency, and accessibility of data and reporting, while supporting more efficient execution and coordination across the firm.
“Julius has built his career at the intersection of institutional experience and operational leadership,” said David Brenner, Chief Operating Officer of TIFF. “He has a demonstrated history of building and scaling multi-asset investment operating platforms across public and private markets, and brings deep expertise in data architecture and performance reporting. He will be key in advancing our platform and delivering an even stronger client experience.” Mercado’s addition deepens TIFF’s operational leadership and reflects the firm’s continued focus on building a high-performing, client-focused team.
Prior to joining TIFF, Mercado served as a strategic consultant to an OCIO supporting mission-driven organizations and began his career at PwC in the Asset and Wealth Management practice.
About TIFF Investment Management
TIFF Investment Management is an independent, employee-owned investment firm specializing in OCIO services and alternative investment strategies, including private equity, venture capital, and hedge funds. Founded in 1991, with approximately $10Bi in assets under management, TIFF draws on decades of experience to serve nonprofits, family offices, RIAs, and other sophisticated investors. As a certified B CorporationTM, TIFF embeds accountability, transparency, and sustainability into its operations and investment process. TIFF combines nonprofit expertise with institutional-quality access, partnering with long-term investors to deliver sustainable growth and enduring results that can advance their objectives over time. Learn more at www.tiff.org.
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. There is no guarantee that any particular asset allocation or mix of strategies will meet your investment objectives.
The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. These materials also do not constitute investment, legal or tax advice. Opinions expressed herein are those of TIFF and are not a recommendation to buy or sell any securities.
These materials may contain forward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.
Footnotes
i TIFF assets under management (AUM) is as of 9/30/25 and includes discretionary and non-discretionary client assets for which TIFF affiliates provide investment management or advisory services. The private markets portion of TIFF AUM is calculated based upon fund net asset value plus unfunded commitments. Calculation of TIFF AUM differs from the calculation of regulatory assets under management in TIFF’s Form ADV filings with the SEC and may differ from the AUM calculation methodologies used by other investment managers.
B Lab is the independent third party that certifies companies as B Corporations when they meet rigorous standards of social and environmental performance, accountability, and transparency. B Lab certified TIFF Advisory Services, LLC as a B Corporation on September 12, 2025. To remain certified, B Corporations must update and verify their information every three years.
Spend policy methodology often receives less attention than the spending rate itself, despite having an equally meaningful impact on the dollars flowing into an institution’s budget.
While Investment Committees and organizations carefully review the rate annually, the implications and trade-offs of the calculation methodology are often not well understood.
The key trade-off is between spending stability and long-term endowment growth.
Each organization should assess its own needs and priorities to ensure the methodology selected aligns with objectives.
All organizations should be aware that market factors influence each methodology differently.
Over its 35 years of experience, TIFF has guided clients to understand and select the best spending methodology to meet its objectives.
Rethinking Spend Policy: Why Methodology Matters More Than You Think
Spend policy methodology often receives less attention than the spending rate itself, despite having an equally meaningful impact on the dollars flowing into an institution’s budget. While Investment Committees focus on the rate carefully and annually approve it, they don’t often consider with the same rigor how the spend is calculated, even though the methodology has immense impact on the amount of dollars going into the budget on an annual basis.
Based on various studies, the trailing average market value is the most popular spend methodology.1 However, there are a multitude of other methodologies, each with their own trade-offs. A methodology will perform differently depending on the current economic environment and generally falls along a spectrum of ensuring consistency/growth of spend and protecting the endowment corpus (especially in times of drawdown).
This article provides a framework for institutions to consider their objectives and needs when it comes to their spend, and which methodology might best fit those needs.
The Three Main Types of Methodologies
Our Spend Policy 101 whitepaper gave an overview of the most commonly used and discussed methodologies. A brief summary is below:
Endowment Market Value: A predetermined percent of endowment market value, often on a trailing multi-year average basis.
Inflation-Based: Last year’s spend value increased by inflation, sometimes within a band.
Hybrid: A combination of market value and inflation.
There are other less common methodologies that we will not discuss in this article.
Trade-offs Among the Methodologies: A Framework for Consideration
Understanding what is important to your institution will help determine the best-aligned spend methodology. These factors should be documented in an institution’s spend policy, to ensure future leaders and fiduciaries understand the choices made. Each organization should assess their organizational preferences and objectives to help determine the best spend policy.
At a high level, institutions must balance institutional needs for consistency of spend value and what best helps build endowment value for the long term. TIFF has outlined conceptually where each methodology falls across these two considerations.
Source: TIFF internal analysis, representative view of consistency of spend.
A helpful starting point is assessing the institution’s sensitivity to changes in annual distributions. Organizations that rely heavily on endowment spending to fund their operating budget, or that have limited flexibility in other revenue sources, may prioritize policies that provide greater stability in spending levels. Institutions with more diversified or flexible funding sources may be better positioned to tolerate some variability in annual distributions in order to keep spending more closely aligned with investment performance.
Institutions should also consider their longer-term priorities for the endowment. Policies that prioritize consistency in spending can support budgeting and program stability but may require distributions during periods when the endowment is under pressure (e.g. taking out money during a market drawdown). Approaches that more closely track market performance may introduce short-term variability but can better protect the endowment’s ability to support future generations.
Key Questions for Institutions
To help an institution assess its endowment needs and what spend methodology might be appropriate, TIFF recommends focusing on the following questions:
How dependent is the institution’s operating budget on endowment spending, and how much variability in annual distributions can it realistically absorb?
If endowment spending declined meaningfully in a given year (e.g. 10–30%), how would the institution adjust its budget or operations?
How important is it for annual spending to grow consistently to keep pace with inflation and rising operating costs?
To what extent should spending be aligned with investment performance to protect the endowment’s long-term purchasing power?
This will help institutions assess their financial flexibility, reliance on endowment funding, need for predictable growth, and priority placed on endowment growth over time.
How Market Outlook Impacts Methodology
While it is difficult to predict future market and economic performance, it is important to recognize these factors, though out of any individual’s control, have an impact on the dollars in the institution’s pocket depending on the chosen methodology. While TIFF doesn’t support selecting a spend methodology based on market outlook, institutions should still be aware of the impact market factors have on their choice.
An institution can broadly anticipate each methodology to perform better in a different environment. While there are multiple inputs in the various spend methodologies, there are three key market factors across all of the approaches: (1) inflation, (2) market performance, and (3) market volatility.
A moving average will provide the highest dollars in the withdrawal when market performance is high and inflation is low (e.g. during the 2010s). An inflation-based methodology will produce the highest spend in a stagflation environment, where the spend increases to match inflation as the markets are flat (if not down). Hybrid, as it is a blend, typically ends in the middle of outcomes between market- and inflation-based approaches.
Chart: Case Study of Market Factor Impact on Spending Value
Source: TIFF Internal analysis, representative of average approach of each type.
Conclusion
Endowment spending policy is ultimately a reflection of an institution’s financial priorities, risk tolerance, and long-term mission. While the spend rate often receives the most attention, the methodology used to calculate that spending can have an equally meaningful impact on both annual budget support and the preservation of the endowment over time. By thoughtfully considering the trade-offs between spending stability and long-term endowment growth, and by aligning methodology with the institution’s financial structure and objectives, organizations can adopt a policy that supports both present needs and future generations. A well-documented approach ensures that these decisions remain intentional and well understood by future leaders and fiduciaries.
For 35 years, TIFF has helped endowed nonprofits achieve their investment goals to support their missions. One element of that support involves providing strategic governance advice to institutions as they navigate these challenging and “no-right-answer” topics. TIFF helps guide institutions toward the answer that best aligns with their organization’s financial structure, priorities, and mission.
Past performance is no guarantee of futureresultsand the opinions presented cannot be viewed as an indicator of future performance. There is no guarantee that any particular asset allocation or mix of strategies will meet your investmentobjectives.
The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. These materialsalso do not constituteinvestment,legalor tax advice. Opinions expressedhereinare those of TIFF and are not a recommendation to buy or sell any securities.
These materials maycontainforward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,”“will,”“should,”“expect,”“plan,”“intend,”“anticipate,”“believe,”“estimate,”“predict,”“potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.
The referenced case study is included for illustrative purposes only, and was selected for inclusion based onobjective, investment guidelines-based criteria for the purpose of describing the investment processes and analyses that TIFF uses to evaluate such investments.
Footnotes
FY25 Commonfund-NACUBO Study of Endowments, FY25 Commonfund-NBOA Study of Independent Schools.
Institutional Investor: Growth Is Shifting to Private Markets
Kane Brenan
Chief Executive Officer & Board Member of TIFF Advisory Services
In a recent Institutional Investor article on growth versus value investing, comments from Kane Brenan, CEO of TIFF Investment Management, highlight that many of today’s largest growth opportunities are increasingly occurring in private markets. The article draws on Brenan’s earlier remarks published in Essential Allocator, Institutional Investor’s weekly newsletter for institutional allocators (February 13, 2026).
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. There is no guarantee that any particular asset allocation or mix of strategies will meet your investment objectives.
The materials are being provided for informational purposes only and constitute neither an offer to sell nor a solicitation of an offer to buy securities. These materials also do not constitute investment, legal or tax advice. Opinions expressed herein are those of TIFF and are not a recommendation to buy or sell any securities.
These materials may contain forward-looking statements relating to future events. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. Although TIFF believes the expectations reflected in the forward-looking statements are reasonable, future results cannot be guaranteed.
You are now leaving TIFF Investment Management’s website and are going to a website that is not operated by TIFF Investment Management. We are not responsible for the content or availability of linked sites, and our inclusion of links to third-party websites does not imply any endorsement, approval, verification or monitoring by us of any of such linked sites’ content.
