Manager selection is becoming increasingly critical as private capital enters the next phase of its life, writes Anthony Tutrone, global head of Neuberger Private Markets. When I graduated college and started my career 40 years ago, there were only a handful of private equity funds over $1 billion. The opportunity for them was clear: buy small- to mid-sized companies that were undermanaged, run them better and sell them for a higher price.

With equity often being less than 20 percent of the capital structure, even relatively modest increases in enterprise value could produce extraordinary returns to investors.