Chris Williams’ Post

Private equity firms will now be tested for their true skill, as they can no longer rely on debt to generate returns. With business becoming much more competitive, the game will be back to basic. The winners will be the ones who have: - Superior judgment, - More efficient deal sourcing, - More accurate market predictions, and - The ability to make real operational improvements. #privateequity #privateequitybusiness #investmentstrategy #investmentskills

The article delves into the obstacles currently being encountered by private equity firms as a result of a decline in deal-making activities. In the midst of ongoing uncertainty in the global economy, private equity firms are encountering difficulties in divesting investments, leading to a high level of unsold assets. This decrease in deal-making is significantly impacting the private equity sector, with firms struggling to locate buyers for their investments and consequently seeing a rise in the value of unsold assets, posing a potential risk for investors. The article mentions various factors contributing to the slowdown in deal-making activities, including economic uncertainty, geopolitical tensions, and regulatory adjustments. By exploring these underlying factors, a better comprehension of the challenges faced by private equity firms can be attained. In addition, the article points out that the dearth of deal activity is not only affecting the financial performance of private equity firms but also impeding their ability to raise fresh funds. With an increasing number of unsold assets on their balance sheets, these firms are under pressure to identify suitable buyers to unlock value and produce returns for their investors. Furthermore, the article underlines the significance of strategic decision-making and proficient deal execution in navigating these tumultuous times. It sheds light on the challenges confronting the private equity industry firms should seek ways to surmount these obstacles in order to generate returns for their investors. Via Financial Times #PrivateEquity #DealMaking #Investing #FinancialNews

PEs are adjusting to current economic conditions, shifting towards more strategic dealmaking while adjusting to current market valuations. It's an opportunity for PE firms to demonstrate adaptability and sound judgment. How can these firms approach their investment strategies to effectively balance the competing interests of investors seeking return and long-term growth? #privateequity #pe #investments #valuecreation

Time to (Re)Focus on the Operational #ValueCreation 1. Challenging Outlook for Private Equity: Private equity executives warn of lower returns due to the post-pandemic investment frenzy. Exiting investments from trillions of dollars worth of unsold companies has become difficult, especially those made during low interest rates and high market valuations in 2021-2022. 2. Market Conditions: The private equity industry is dealing with $3 trillion in unsold assets and $3.9 trillion in unspent capital, termed as "dry powder," according to a mid-year report by Bain & Co. The industry faces the challenge of selling these assets to return capital to institutional backers like pension and sovereign wealth funds. 3. Shift in Strategy: Executives highlight the need for a shift towards deals that offer operational or strategic improvements rather than relying on buying companies with cheap debt and selling them later at a higher price. This approach is expected to dominate the next decade. 4. Global Opportunities: Despite challenges, there are still investment opportunities, especially outside the US in markets like Japan and Europe. Carlyle’s CEO Harvey Schwartz emphasized potential investments in Japan and predicted extraordinary opportunities in Europe over the next five to ten years. 5. Slow Recovery in Deals: There has been a slow rebound in private equity-backed sales, which are projected to rise by 17% this year, still making it one of the worst years for exits since 2016. Valuation disagreements have hampered deal-making, but the situation is improving as economic conditions stabilize. Operational value creation is crucial in the current private equity landscape. As easy gains from financial engineering become harder to achieve, private equity firms must focus on enhancing the operational performance of their portfolio companies. This involves improving efficiencies, reducing costs, and driving strategic growth, which are essential for realizing value in a market where traditional buy-and-sell strategies are less effective. Zanders is at the forefront of Treasury 4.x, providing innovative treasury and finance solutions that align with the needs of modern private equity firms. By leveraging advanced technologies and methodologies, Zanders helps organizations optimize their treasury operations, manage risks more effectively, and achieve greater financial transparency and efficiency. This proactive approach supports the operational value creation that is now essential for private equity success, ensuring firms can navigate the complex economic environment and capitalize on new investment opportunities.

Private Equity is entering a new era where paying high prices for companies using cheap debt before selling them just a few years later at a higher price ratio won’t work for a while. Popular strategies may include investing in companies and improving operations to generate profit, buying divisions of companies, or investing in companies that are still founder-owned. There will always be hotbeds of activity, too, and Europe is a source of optimism for some. Contact us for to source the Private Equity professionals you need for the new environment. https://lnkd.in/eSJ2NZTn #privateequity #lbo #executivesearch

PE to go 'back to the future' in the new rate environment. As the financial landscape evolves, private equity firms can no longer solely depend on low-cost borrowing to generate returns. The future success of the industry will depend on a return to the fundamentals of identifying promising investment opportunities and implementing sound operational strategies. #privateequity #financialmarkets #operationalexcellence #delorean https://lnkd.in/eFDFPaFX

https://lnkd.in/eYEKUTRv Investing with a Private Equity firm is great....however, when a PE purchases companies that work in the Defense Industry and Intelligence Community all that will happen is the employees will lose and so will the country

Cautious optimism for European private equity in 2024: New opportunities for turnaround investors? A recent Norton Rose Fulbright research outlines the major factors that will influence European private equity in 2024. Although the future is cautiously optimistic, there are also fresh prospects. We at Tactical Management are aware of the particular difficulties and chances that European businesses confront. Our team of professionals can assist you in finding and unlocking your company's hidden wealth. https://lnkd.in/gGTXBV5e #privateequity #opportunity #business #growth

Read our latest UK mid-market private equity report re UK investment activity over 2023 and expectations for 2024. https://lnkd.in/e7eSR8uR #KPMG #privateequity #UKmarket

PE funds have amassed significant sums of dry power in recent years and have been under pressure to deploy. This has led to a wave of add-on activity as firms have sought to generate growth through buy-and-build strategies and inorganic growth. Add-on transactions accounted for 54.7% of European PE deal count last year—the largest share during the last decade....