Private equity has existed for the last several years in a "perfect calm". All the more important factors in determining success had become near perfect at the same time.

Low real interest rates have been important but not as vital as the easy availability of friendly credit. All of this is pretty well understood. The extreme fashionability of aggressive diversification, particularly into private equity, has also been noticed. But what has not necessarily been understood is how it has intersected with and exaggerated the perfect calm.