Private equity was once an investment niche. Today, the wealth controlled by its leading firms surpasses the GDP of some nations. Private equity has overtaken investment banking--and well-known names like Goldman Sachs and Morgan Stanley--as the premier destination for ambitious financial talent, as well as the investment dollars of some of the world's largest pension funds, sovereign wealth funds, and endowments. At the industry's pinnacle are the firms' partners, happy to earn "two and twenty"--that is, a flat yearly fee of 2 percent of a fund's capital, on top of 20 percent of the investment spoils.
