At its best, private equity offers investee companies stability and strategic guidance, especially in turbulent times. Over the past year, as trade tariffs and geopolitical tensions rattled public markets, many companies found refuge in private ownership. For investors, too, private equity can offer a sense of security. Unlike public markets, which are prone to volatility and sentiment swings, private equity investments are held with solid conviction, and are actively managed by teams with deep domain knowledge and a long-term horizon.

Yet even as the industry matures, myths persist — particularly around how private equity firms realise value. One of the most enduring misconceptions is that IPOs are the primary, or even the preferred, exit route. The truth is far more nuanced.

IPOs: The Exception, Not the Rule

While IPOs dominate headlines and often capture investor attention, particularly when activity slows, they account for only a small share of private equity exits. Even during strong bull markets, public listings typically account for just 10 – 20% of exit activity by value at best. In the past year, that figure has been even lower. At HarbourVest Global Private Equity (HVPE), 90% of exits we achieved were through mergers and acquisitions (M&A), not IPOs.

This may not be a temporary shift – it could be a reflection of a broader structural evolution. Most exits occur via trade sales to corporates or sponsor-to-sponsor transactions, where one private equity firm sells a company to another. These deals provide liquidity to investors while keeping the company private. They’re efficient, predictable, and increasingly common.

The Rise of Continuation Vehicles

In recent years, a fourth exit route has emerged: continuation vehicles. These structures allow a private equity manager to retain ownership of a high-performing asset by transferring it into a new fund, often with fresh capital from secondary buyers. Investors who want liquidity can cash out, while others roll their investment forward.

This innovation has transformed the landscape. HarbourVest Partners was an early mover in this space and has invested in continuation fund transactions for well over a decade. Since 2022, the market has exploded. A recent example from HVPE’s portfolio is Froneri, the ice cream and frozen food manufacturer in Europe which owns brands including Häagen-Dazs, which is undergoing a continuation fund transaction involving a €3.6 billion capital injection.

The transformation at play 

What’s emerging is a self-sustaining private markets ecosystem — one that’s increasingly independent of traditional public markets. Private credit funds now provide debt financing, while secondary funds offer liquidity on the equity side. Structuring innovations mean that investors can access cash without needing a public listing.

This decoupling from public markets is significant. It reflects the growing maturity and scale of private equity. Over the past 15 years, the number of companies backed by private equity has grown fivefold. Many of today’s most innovative businesses, such as the London-headquartered fintech Revolut, are choosing to stay private for longer, raising capital through private rounds rather than rushing for IPOs.

What this means for retail investors

Retail investors might reasonably ask — “why should  any of this matter to me?” The simple message here is that for retail investors, this shift marks both reassurance and opportunity. Listed private equity vehicles, such as HVPE, give investors access to a diverse portfolio of private companies, ranging from early-stage innovators to mature businesses — long before they enter the public consciousness. Think of it this way — the closest comparison is investing in companies like Amazon, Apple, or Facebook (now Meta) when they were still private. The potential for outsized returns is far greater at this stage. Private equity is where the pre-IPO action happens, and investors can capture a bigger share of the growth before a company lists.

Looking Ahead

There’s a backlog of exits building in private equity portfolios, as companies held for six years or more reach maturity. As managers begin to unlock liquidity, we’re likely to see a wave of transactions across all exit routes.

At the same time, institutional investors are increasing their allocations to private equity, and wealth managers are formalising exposure for high-net-worth clients. Evergreen funds are opening doors to a broader investor base, helping to democratise access to the asset class. Meanwhile, the secondaries market is buzzing with activity as long-held private companies become increasingly attractive.

Private equity is no longer just about traditional leveraged buyouts and IPOs. It’s a dynamic, innovative engine of economic growth, and one that’s reshaping how capital is deployed and value is realised. For investors willing to look beyond the headlines, the opportunities have never been more compelling.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.