How can you maintain a positive attitude during a downturn in the Private Equity industry?

As a founder or leader, it is extremely critical for you to approach situation considering ‘What if’? How will we get through the situation if things do not improve or get better? These are few critical Questions to ask when there is a downturn. Be prudent and wise, at the same time!

This is the core principle in Stoic philosophy, and it aligns with the teachings of Epictetus - focus on what you can control and accept what you cannot. The famous Stoic phrase often associated with this idea is: "God, grant me the serenity to accept the things I cannot change, Courage to change the things I can, And wisdom to know the difference." This concept has also had a profound influence on various philosophical and psychological approaches, including cognitive-behavioral therapy (CBT), which often draws on Stoic principles to help people cope with life's challenges.

If you continue to focus on what you are the best in the world at, you’ll make more progress than those focused on external factors they can’t control.

This one is big. The phrase “don’t try and boil the ocean” comes to mind here. And also, “low hanging fruit”. In both cases, recognizing that any big project or anything with a seemingly impossible set of tasks or to-dos can always be broken down to a set of instructions that chips away at that internal feeling of being out of control (see: chaotic). Avoiding chaos means focused effort. And why would anyone put effort towards that which is out of their control? Of course seek to understand that which you can’t control to then build guardrails wherever possible. Always stay positive and persistent!

During a boom or bust cycle, being optimistic about the future is key. Firstly, your number one goal as an investment manager is to provide unwavering support to portfolio companies and their founders. These individuals are at the forefront and are focused on driving progress even in challenging times. Secondly, prioritize your mental health by regularly monitoring your well-being. Taking breaks, whether a brief stroll during the workday or a rejuvenating long weekend, can significantly impact your resilience. Remember, maintaining a positive mindset amid cycles can fuel resilience and pave the way for brighter opportunities.

Failure is one of the greatest teachers. Don’t be afraid to be its student in the class of life. Not only do you gain wisdom through experience in an operational sense; you grow as a person through humility, reflection, learning, and confidence. You may fail again on your next try (and again), but success is found through discipline, persistence, and perseverance. You got this!

During hard times you need to put the blinders on. To me that means you create your own idea of what wins and losses are and, as you always would, celebrate the wins and study the losses. So much of what is coming at us is manufactured emotion, you can’t let it get you out of your rhythm.

Finding a chance to celebrate can mean many different things. What do you think of when you hear that word? You should work to ensure your definition of celebrate is exactly that - yours. Much like the definition of success you get to define it for yourself, your company, your team, your family. Celebrate with your favorite meal. Perhaps leaving the office an hour early on Friday. Maybe even waking up 30 minutes before anyone else in your household to have a Zen moment of quiet reflection and focus before the noise of the day beckons you away. Start with the definition and celebrating becomes easier to do and feel good about. And good feelings motivate.

Building a robust company in a large market with a sustainable competitive edge hinges on capital efficiency. The key is to innovate, carving a unique niche and fostering a culture focused on customer satisfaction and continuous improvement. Ideal growth is self-sustained, reducing reliance on external funding like private equity (PE). However, PE can still add value through strategic guidance and industry expertise. This approach not only ensures long-term success and profitability but also positions the company as an attractive, strategic investment rather than a financial necessity for PE firms. Such a strategy yields rewards both financially and in the satisfaction of creating a lasting, impactful enterprise.

This is much easier said than done. And it doesn’t happen without intention and true effort to think longer term and realize than any low point is a way to see just how lean you can be and from that, embrace your humility and humbleness. Getting to experience a good balance of both long and short term perspectives will keep you grounded and make sure you realize, in the long term, how that low point got you to where you are today. You lived through it. Life is ultimately a series of experiences. Most of them not unique but already experienced by another person. The trick is finding that person and seeking that knowledge. And if you can’t, then become that person for someone else.

Two things - have a short memory and recognize you can only control what is in your control. If you close the deal or the deal falls apart - celebrate or lick your wounds - and then move forward quickly. We live in the world of transactions and moving on to the next one whether coming off of a victory or defeat is crucial to long term success. Market downturns are nothing you can control as an individual. What you can control is your level of work and output. Concentrate on doing your best there - keep planting seeds - you don't know when they will sprout - good market or bad market.

Encourage a positive team environment by promoting open communication, providing mutual support, and promoting collaboration. These practices are essential for sustaining morale and cultivating a shared sense of unity, especially in times of difficulty.

PE firms stay long in the business and hence wach firm will see an entire economic cycle including recession. Seasoned firms will know the time will improve and its just the matter of time. Most bigger firms are off to shopping at lowest costs during such periods.