Thank you for your comment, John. Sorry for the slightly long answer.

You might be aware of recent research (from scholars and consultants) that argues that, on the whole, PE fails to outperform public equity. The danger with that sort of generalisation is that it ignores outliers - strong PE performers who can justify their fees.

But to answer your point, there are several factors to bear in mind when comparing private equity and public equity. The cost of debt and the level of fees are two, as you rightly flagged out. But there are others.

One that is important: as a public investor, it is unlikely that you will be able to leverage up as much your position as some of the most aggressive PE fund managers.

And if you do manage to use 70% or 80% debt to purchase a stock, as an individual investors you will be solely exposed to the risk of default in case the stock drops in value, whereas in PE the risk lies with the portfolio company, not with the fund manager. Ther fund manager cannot go bankrupt in case of default, whereas the investee can and will.

In addition, PE fund managers are able to negotiate preferential terms with lenders because they do repeat business with them. So amend & extend procedures are available to PE-backed portfolio companies. I very much doubt that an individual public stock investor will have that much negotiating power with lenders. That will affect his/her ability to renegotiate and hold onto a distress asset as long as TH Lee, TPG et al were able to do with Univision.

There is one clear benefit from investing in public markets, though - liquidity. The ability to sell most public stocks readily (except for small stocks with little or no liquidity) significantly reduces the risk profile of public markets.

Hence the only justification to invest in PE is if it can generate excess return above that achieved in public markets.

To repeat, some individual PE fund managers appear to outperform public markets, but not the overall PE industry (if research papers are to be believed). I recently submitted a series of articles to this blog, so maybe they will be posted in the coming months and provide more information to address your question.