The decreasing number of public companies and high fees in private markets are creating “the perfect conditions for a passive player to upend private equity,” according to an article in Institutional Investor.

The article cites comments from a report by Willis Towers Watson’s investment think tank that suggests the current model of private equity, “which essentially involves putting leverage on a company, improving it operationally, and then selling it in a short period of time—has reached the end of its useful life.” In an interview, WTW senior investment consultant Liang Yin said, “a private equity firm needs to take extraordinary steps of squeezing out costs and using borrowed money to have any hope of generating returns above the fees,” which the article notes can go as high as 7 percent.

According to Yin, there are many other “passive-like” approaches available for investing in private companies that involve lower leverage, citing Warren Buffett’s passive investing style of holding companies for the long term. “With a Buffett-style private equity model,” says Yin, “asset managers could charge significantly lower fees and reduce the need to make disruptive changes at the corporate level to generate returns.”

Another option, Yin said, is one in which quantitative managers “replicate private equity return streams by holding public stocks.”

“Passive has disrupted the public space,” Yin concluded, adding, “I don’t see why it couldn’t disrupt the private space as well. They’re both equity, just in a different form.”